New Zealand: Dairy and Products Annual

New Zealand milk production is forecasted to fall slightly in 2023. Although milk prices are at extremely high levels and expected to remain elevated, a number of issues are limiting the production response. This includes a slowly declining national herd, and also that on-farm inflation is expected to remain high as a result of the weak NZ dollar impacting imported input prices, as well as strong global fuel prices. In addition, a threepeat of the La Niña weather pattern is already forecasted, and similar patterns during the last two seasons resulted in prolonged dry conditions in regions that represent over 60 percent of the national dairy farms. FAS/Wellington is forecasting that milk supply for processing will also be back slightly, although there are expectations that whole milk powder (WMP) production could recover somewhat with any rebound in Chinese import demand. Skim milk powder (SMP) and butter production are both forecast to ease in 2023.