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Analysis of New Zealand Milk Supply Situation Author: Siya Ding Company: QYR Research Center Date: 2017/5/25
New Zealand's milk production has been affected by excessive rainfall in spring, milk production peak output lower than in previous years. In mid-November 2016 occurred in the South Island Kaikoura near the earthquake also affected the region's milk production. As of December 2016, the milk production in this season was about 3% lower than the same period last season. Dairy elimination rate than the previous quarter significantly reduced the price of the original milk is also more optimistic about the prospects, but the weather will create some growth obstacles. Heavy rains in the early stages of the season resulted in large areas of forage damage and lodging in some areas (especially in the major dairy areas of the North Island) and delayed maize cultivation. After the weather conditions improved, pasture growth began to return to the average level, but before the weather conditions caused by grassland problems will limit the actual production growth. A positive aspect of the decline in milk production during spring production is to provide greater flexibility for Fonterra's production. In the case of a large production capacity of the factory, the production of skim milk powder than the production of whole milk more efficient, so more popular. The low peak production this year allowed the company to produce more full-fat milk powder with better returns, which has also been reflected in the recent price changes on the GDT auction platform.
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QYR thinks the company's milk production will decline, which due to the competition of small companies lose some market share.This production season change will continue to the production end of the season;Raw milk price also is expected to rise;As the global feed prices decline, the New Zealand all manufacturers are facing financial pressure will likely slow.
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