The majority of New Zealand's North Island and the eastern regions of the South island have soil moisture levels significantly lower than normal according to data from the National Institute of Weather and Atmospheric Research. The regions affected are home to around 84% of the country's dairy cows.
Key to the ability of the New Zealand (NZ) dairy industry to withstand periods of drought is the availability of supplementary feed. According to industry body DairyNZ, good grass growth at the end of 2014 meant that many farmers have good supplies of hay and silage which will help to maintain production through the dry period.
In the first five months of the current season, NZ milk production is running 4.9% higher than the previous year. Although the forecasted milk payout has been reduced by around 40% over the past year, putting pressure on margins, it is not yet evident that this or the current dry weather conditions will have a significant impact on NZ milk production. In a global market context, there is little to suggest that exports from New Zealand will slow down significantly which may delay any price recovery.
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