New Zealand and Australia observe a strong milk output

Milk production in Oceania showed a strong start to the year, with New Zealand reaching record March output and accelerating growth supported by favorable weather and solid milk solids performance. Australia also returned to growth, marking its first year-on-year monthly increase, although expansion remains modest against a low baseline. Improved rainfall supported production in both countries, while rising dairy commodity prices in the region offer additional incentives. However, increasing risks of El Niño conditions could weigh on production prospects in the coming months.New Zealand closed March with a milk output of 1.94 million tons, growing by 9.76% compared to the previous year and confirming the highest production figure for the month. Moreover, growth accelerated substantially from the 2% annual increase observed in January.As a result, cumulative output stands 5.5% higher than the previous year, totaling 6.34 million tons in the first quarter of the year.Milk solids (MS) production reached 190,367 tons during the same period, up 9.42% from the previous year. Although MS production evolved in line with liquid milk, accelerating over the previous two months, growth was slightly lower. This indicates that the fat and protein content in the milk shifted from 1.3% annual growth in February to a 0.3% decline in March. That said, MS content in milk still increased by 5.8% month-over-month to 9.84% in March, with the annual contraction driven by an elevated 2024 baseline.All things considered, the elevated MS content in previous months contributed to notable growth in New Zealand’s MS output in the quarter. As of March, MS output increased by 6.3% compared to the previous year, reaching 592,120 tons.New Zealand experienced mostly neutral weather conditions in February, followed by slightly more favorable rainfall in late March. This likely supported grass production and milk output in the first quarter. Overall, soil moisture is broadly normal in the South Island and abundant in the North Island. With most regions preparing for winter, warmer weather conditions are expected for April and May, along with increased rainfall in the North Island and the east of the South Island.Meanwhile, most dairy commodities have recorded pricing gains in the first quarter across the region, with SMP observing particularly strong increases. This pricing strength could provide additional support for production in New Zealand, despite the record-high output observed in the previous month.AustraliaAustralia reported more modest growth in the period, with milk output increasing by 1.6% year-on-year to 612.3 million liters. This represents not only a notable acceleration from the 0.6% growth observed in February but also the first monthly increase compared to 2024.MS content remained positive during the month. Protein increased by 1.1% year-on-year to 3.56%, while milkfat rose by 0.8% to 4.52%. As a result, Australia’s MS output increased at a faster pace than liquid milk, rising by 3.7% compared to the previous year.Australia reached a cumulative output of 1.91 billion liters in the first quarter of the year, reflecting an increase of 1.6% compared to the previous year. That said, the country faced notable production challenges in 2025, resulting in a relatively low baseline for comparison. Quarterly production stands 1.2% above the five-year average, underlining a solid first-quarter performance.Quarterly growth was supported by a notable increase in milk collection in Victoria (+1.4% YoY) and New South Wales (+4.4%), despite lower volumes from South Australia (-4.8%) and Western Australia (-0.4%). The recovery in milk production was supported by increased rainfall, partly driven by the occurrence of tropical cyclone Nerelle. That said, the risk of El Niño conditions is increasing for the period between April and June, potentially limiting water availability and renewing pressure on milk production in Australia.