May 6, 2019

Fonterra's March milk production falls 8%

New Zealand's Fonterra Co-Operative Group Ltd said on May 3 that its local milk production in March had declined 8% year-on-year, but exports, supported by a robust Asian demand, rose.

Exports from New Zealand surged 27% in February, the dairy company said, with shipments to China increasing 11% over the month.

China makes up most of Fonterra's market, as buyers in the mainland prefer internationally made whole milk powder and infant formula, over their local counterparts.

Australian milk production fell 13% in February as sustained drought conditions caused higher input costs in the region, Fonterra said.

Milk production across Australia and New Zealand fell as collections declined in the wake of dry weather conditions.

Severe drought across parts of eastern Australia has hit cattle and other agriculture companies and crimped the country's wheat exports last year. It also prompted Fonterra to cut 2019 collection and earnings guidance, despite swinging to a first-half profit for the year.

Fonterra's New Zealand milk collection declined 9% in March, while it fell 27% in Australia.

- Reuters