Fonterra's EU milk production drops in June

  • 26/09/2016
AUCKLAND, NEW ZEALAND - JANUARY 14:  A tanker truck sits outside the Fonterra Brands New Zealand plant on January 14, 2014 in Auckland, New Zealand. New Zealand diary producer, Fonterra has recalled 8,700 bottles of cream contaminated by E.Coli, the second scare for the company in recent months. Fonterra made headlines in August, when it recalled milk formula and other products distributed to outlets in China and throughout Asia.  (Photo by Jason Oxenham/Getty Images)

European farmers scaled back their milk production in June, the first time they've done so since March 2015, Fonterra says.

European Union production fell 2 percent in June from the same month a year earlier, continuing the reduction in output as farmers culled stock, spent less on supplementary feed, and poor weather weighed on the region's producers, Fonterra said in its monthly update.

Annual EU production rose 4 percent in the year ended June 30, the same pace as in the year through May 31.

Global production has been falling after last year's slump in dairy prices prompted farmers to rein in output, although recent gains on Fonterra's GlobalDairyTrade auctions in recent months may revive some of that lost interest.

Fonterra's update shows other regions have also scaled back output, with New Zealand milk production down 1 percent in July for an annual decline of 2 percent, while Australian output fell 10 percent in July for a 3 percent drop over the past 12 months.

US production increased 1 percent in July and grew at the same pace on an annual basis.

The New Zealand processor expects annual milk collection of 1.52 billion kilograms of milk solids for the current season, which at the current forecast farmgate payout would see farmers receive about $8 billion, up from the $6.1 billion paid in 2016.

The projected 3 percent decline in milk collection across New Zealand "reflects the likely impact of farmers using more traditional practices to manage their businesses within the limits of the current milk price," Fonterra said.