New Zealand Dairy Season Opens With Record Milk Collections as Weather Risks Build

New Zealand begins the season with record output

New Zealand’s 2026/27 dairy season has opened with record milk collections, strengthening near-term export supply while shifting market attention toward summer weather. August collections reached 131.2 million kilograms of milk solids, or kgMS, up 3.3% from a year earlier, according to Cristina Alvarado, head of Dairy Data & Insights at NZX, writing in Farmers Weekly. Season-to-date production was 4.3% ahead of the previous season.

The strong opening gives processors more raw milk as global production also expands. August milk output rose by 1.7% year on year in the United States, 2.2% in Argentina and 1.8% in Uruguay. European production increased 2.0% in June, while Australian collections advanced 4.0% in July. China was the exception: production fell 2.9% as herd rationalisation continued, although improving domestic milk prices indicated that conditions could be stabilising.

Powder shipments drive export growth

New Zealand dairy export volumes increased 10.2% year on year in August to 192,688 tonnes. Export value grew more slowly, rising 3.9% to US$871 million. The gap between volume and value growth points to a less supportive product and price mix even as more dairy products moved into international markets.

Milk powders led the expansion. Whole milk powder exports rose 22%, and skim milk powder shipments increased 47%. Whole milk powder deliveries to China jumped 64%, while skim milk powder exports to Asian markets excluding China climbed 68%. Cheese exports were 24% higher. These flows reinforce New Zealand’s role as a major supplier of milk powders and provide an outlet for the season’s stronger early milk collections.

China nevertheless sent a mixed demand signal. Its total dairy imports declined 14.7% year on year in August and were 5.1% lower year to date. Whole milk powder imports dropped 41% and skim milk powder purchases fell 23%. Demand was stronger in other categories: anhydrous milk fat imports rose 78%, butter imports increased 119%, and cheese imports gained 39%.

Protein prices outperform dairy fats

Export performance outside New Zealand was uneven. US dairy export volumes rose 2.0% in July, helped by stronger shipments of whole milk powder, cheese and whey, while European exports increased 2.1%. Australian exports fell 7.0% as shipments of whole milk powder, skim milk powder and butter weakened. Argentina’s August volumes were broadly unchanged but remained 19.6% higher for the year to date.

Global Dairy Trade results reflected a market divided between protein ingredients and fats. After the overall index rose 0.9% at Event 411 and fell 1.1% at Event 412, Event 413 delivered a 1.2% increase. Skim milk powder gained 4.3% to an average US$3,847 per tonne, its highest average on the platform since July 2022. Whole milk powder rose 1.2%, while cheddar declined 3.7% and mozzarella fell 3.9%.

The figures show that resilient protein demand is supporting powder prices despite rising milk production in several exporting regions. Greater availability is placing more pressure on milkfat prices, although China’s sharp increases in butter and anhydrous milk fat imports demonstrate that demand differs substantially by product.

El Niño could test summer supply

The main risk to New Zealand’s strong start is a forecast for a strong El Niño, which could bring drier summer conditions. Reduced pasture growth would increase feed requirements and could slow milk production across key dairy regions. A favourable season would keep global supply well supported, but a marked deterioration in pasture conditions could tighten availability quickly.

For producers, processors and dairy traders, the market therefore rests on two competing forces. Strong output in New Zealand and other exporters, combined with lower overall Chinese imports, limits immediate supply concerns. Declining Chinese milk production, firm demand for proteins and selected milkfat products, and the possibility of weather-related losses could support prices if global production growth loses momentum.