Fonterra milk supply still to crest

Fonterra has sent a newsletter to suppliers saying it has a milk wave coming in at the moment.

The company has had a strong spring and if it continues, it will mean one of the biggest year-on-year increases in milk production for a number of years, Gary Romano, Managing Director of trade and operations said.

The combination of a  good autumn followed by a reasonable winter generally throughout the country, has meant
that this week Fonterra will exceed last year’s peak three weeks early.

“Over the last six days milk collection is on average up more than 15% on a daily basis throughout the country compared to last year. In the lower North Island alone this week we have collected 19% more milk than we did for the same week last year. This is putting pressure on milk collection, manufacturing, and the supply chain.

“We have the tankers to collect the forecasted milk but one problem at any of the sites can have a  big flow on effect and can push the schedule back and result in late off farms. In cases where milk volumes exceed milk estimates it means more partial collections. We’re very conscious of the disruption this is causing on farm.

“Across NZ we have been averaging 40 to 150 late off farms across our 10,000 farmers over the past few weeks. The problem is also being amplified by some of our competitors cancelling their daily DIRA milk on occasions and we are having to now find somewhere to process that milk.”

“We are still three weeks out from the traditional peak which usually comes around October 20. We have already got contingencies in place to cope with higher than budgeted/forecasted milk volumes and we are doing everything we can to minimise the impact on your farms. But if the milk wave continues we could be heading for a Super Flush and this could result in more late off farms.

Our production is up and neighbours are also reporting higher yields.

However, the law of supply and demand means that this could result in a fall of prices.

In other milk news, Waikato dairy co-operative Tatua has announced its highest ever payout of $8.10 a kilo with a 58 cent retention.

Westland Milk has delivered its second highest payout  of $7.58.

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