For the second year, milkmen in New Zealand could again bag a NZ$10 ($5.72) per kilogram of milk solids (kgMS) farm gate average.
As the last quarter of the 2024-25 season closes in May, milk could still lock at the forecast NZ$10+ ($5) per kgMS.
Westpac’s forecasts have even got bold enough to bet that the product might hit NZ$10.30 ($5.90) a kgMS soon.
The estimates, which have proven correct so far, glean data from the domestic Global Dairy Trade (GDT) auction.
Up to mid-February 2025, the auction had brought milk prices in New Zealand up by 3.7%, week-on-week.
Auction Prices Drop
However, on the auction night of February 17-18, the prices at GDT slipped by a cumulative 0.6%.
The most affected product, which often determines the farm gate rates of the leading dairy hubs like Fontera was milk powder. It slid by 0.2% to US$4,153 a tonne.
Despite the slide, milk powder is still a strong performer buoyed by a 5% and 4.1% consecutive weekly rises since early February.
Skim milk powder in its part lost 2.5% to US$2,754 a tonne, after having risen 4.7% in the foregoing auction.
Low Costs
Despite the latest drop on the 18th, low costs are keeping NZ’s milkmen locked onto the top dollar price of NZ$10 ($5).
Indeed, a study by Racobank shows that the Oceania region wallows at the bottom of milk production costs worldwide.
NZ and Australia share an enviable US¢37 (NZ¢0.65) a liter in production costs while the global average is US¢0.47 (NZ¢82) a liter.
Currency weakness against the dollar has apparently also helped New Zealand earn a 9% production cost discount in 2024.
This is happening despite worldwide feed costs pushing overall dairy expenses up by 19% between 2019 and 2024. For now, New Zealand where rain has resurfaced after a dry El Niño summer is not feeling the feed pinch.
It thus looks like the reigning positive performance is propelling New Zealand’s farm gate milk towards a dream NZ$10.30 ($5.90) a kgMS. In a cost analysis set up, this means that most farmers can get a profit of at least NZ$2 ($1.14) per kgMS. Below is further statistical examination of the dairy price performance in the Oceania nation in recent years.
New Zealand Dairy Prices Statistics
After beginning poorly in 2024 at NZ$59.27 ($33.93) per 100 liters, milk prices in New Zealand rebounded late 2024.
By the start of the new market year in June 2024, they had breached the NZ$60-per-100 liters mark. By the end of the year, they were at NZ$76 ($43.50) per 100 liters. This is their highest point since they had hit NZ$72.96 ($41.76) in January 2022, during the pandemic.
How have payouts in NZ in kgMS turned out lately?
New Zealand’s dairy farmers had their strongest per-kgMS prices in the past two decades during the 2024-25 season. The prices ranged between NZ$9.50 and10.15 per kgMS ($5.44-5.81) in five of the leading dairy houses. These include Fontera, Tatua, Westland, Synlait and Oceania Dairy. The 2024-25 price is a far cry from the two-decade low of NZ$3.34 ($1.91) per kgMS in the 2002-3 period.