European milk output falls for first time in more than a year, Fonterra says

Monday 26th September 2016

European farmers scaled back their milk production in June, the first time they've done so since March 2015, Fonterra Cooperative Group 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. "Over the past two seasons farmers have reduced stocking rates and supplementary feeding to help lower costs."

Fonterra's New Zealand milk collection in August fell 5 percent to 95.8 million kgMS, with the North Island take down 6.4 percent and South Island down 0.7 percent. Australian collection dropped 12 percent to 8.4 million kgMS.

BusinessDesk.co.nz

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