Summary
New Zealand's September milk production rose 11.893 percent year-on-year, though a weaker pasture growth index in mid-August may weigh on September output. With Q1 (New Zealand summer) set to compare against last year's record pasture conditions, production could turn negative year-on-year even in normal weather, and El Niño remains a downside risk. However, weather has been normal to favourable so far this season, and pasture growth indices since mid-September are well above average and last year's levels, suggesting production gains can continue through November.
On exports, New Zealand's September milk-equivalent exports jumped 11.892 percent year-on-year, far exceeding the 11.891 percent forecast. By product, whole milk powder (WMP) exports reached 81,490 tonnes, up 11.890 percent; butter 19,287 tonnes, up 23.3 percent; skim milk powder (SMP) 20,138 tonnes, up 31.4 percent; cheese 28,915 tonnes, up 15.6 percent; casein 5,509 tonnes, up 77.2 percent; while infant formula was 9,018 tonnes, down 7.3 percent, and lactose 1,393 tonnes, down 33.8 percent. In terms of September source-country concentration, 87 percent of WMP came from New Zealand (22,813 tonnes), 81 percent of butter (10,266 tonnes), 96 percent of AMF (3,884 tonnes), and 56 percent of cheese (10,234 tonnes).
For destinations, China was the largest destination for New Zealand WMP (19 percent, 15,602 tonnes), butter (36 percent, 6,936 tonnes), cheese (36 percent, 10,335 tonnes), and infant formula (75 percent, 6,774 tonnes). Indonesia was the top destination for SMP (21 percent, 4,162 tonnes), with China second (19 percent, 3,770 tonnes). The GDT TE414 index rose 2.5 percent, beating futures expectations, led by BMP up 8.4 percent, with WMP/SMP strengthening in tandem while AMF/cheddar fell against the trend.
The butter/AMF/SMP combination return remained highest at 11.89 NZD/kg MS, while cheese returned the lowest at 9.71, so milk flows will continue to favour the powder/fat lines. This week's ONIL (Algeria national tender) went almost entirely to New Zealand.
Commentary
New Zealand's September dairy exports surged 19.2 percent year-on-year, far exceeding expectations, with whole milk powder, butter, skim milk powder and casein all posting double-digit growth. China remained the largest buyer, accounting for 19 percent of WMP, 36 percent of butter, 36 percent of cheese and 75 percent of infant formula. The strong export performance contrasts with production growth: September milk output rose only 1.9 percent, and summer faces a high base effect and El Niño risk, with production potentially turning negative.
The export surge reflects inventory release and a recovery in global demand rather than production support. The GDT auction index rose 2.5 percent, led by milk powders and fats, indicating market expectations of tighter supply. For NZ SME owners, the short-term export data is impressive, but they need to watch for supply fluctuations from downside production risks.
Structural changes in the Chinese market deserve attention: infant formula exports fell 7.3 percent year-on-year, while butter, cheese and other categories grew significantly, reflecting a shift in Chinese consumption from infant formula to foodservice and baking ingredients. Small and medium dairy firms could consider adjusting their product mix to increase exports of high-growth categories such as butter and cheese, while also watching Southeast Asia, where Indonesia has become the largest destination for New Zealand SMP. In addition, Algeria's national tender went almost entirely to New Zealand, showing strong demand for milk powder in the Middle East and Africa, but that market is price-sensitive with limited margins.
Large co-operatives such as Fonterra continue to dominate exports through scale and brand advantages, and smaller firms need to find differentiation opportunities in niche categories or regional markets. In the global dairy trade landscape, EU butter exports jumped 46.4 percent year-on-year, intensifying competition, and New Zealand firms need to build barriers through quality and sustainability.
Keywords: New Zealand milk production, dairy exports, whole milk powder WMP, GDT auction, China imports, El Niño, skim milk powder SMP, dairy prices, ONIL tender, pasture growth index
Photo by Alexas Fotos on Pexels
Source: dairyoline.com
Disclaimer: This article is compiled from publicly available sources for general information only. The analysis and commentary are editorial opinions. MiDeer Observer does not guarantee the accuracy or completeness of the information provided. Readers should seek independent professional advice before relying on this content, or contact us for more information.
