Drop in production forces Fonterra to reassess
Fonterra is assessing the impact of a big drop in milk production this month on its contract book and future production plans.
In its latest global dairy update, the world's biggest dairy exporter said daily milk volumes across the central and upper North Island were down significantly in the early part of October due to the impact of wetter than normal spring weather and this has continued, particularly in the key dairying region of Waikato where daily milk volumes are down around 14 per cent compared to last year.
Given that milk collections are now at the peak of the season, they are not expected to recover and will flow into the balance of the season, it said.
In September, Fonterra said New Zealand milk collection dropped 2 percent while in Australia it was down 9 percent.
Season to date figures indicate a 2.9 percent drop in milk production compared to last year, with a 4.9 percent decline in the North Island, and a 13 percent drop in Australia.
As a result, the cooperative's forecast offer volumes on the GlobalDairyTrade auction over the next year has been decreased by 11,199 tonnes. That means Fonterra has dropped GDT offer volumes by 55,481 tonnes since August.