Milk production in June surged 17.8% year-on-year, opening New Zealand’s 2025/26 dairy season with unexpected strength.
The month generally marks a lull in output, but conditions have been more favourable. “The stars are aligning for a strong spring,” says ANZ agricultural economist Matt Dilly. Last season’s 3.0% growth was the strongest in more than a decade.
High Milk Prices and Market Signals Influence On-Farm Strategy
Fonterra has opened the season with a milk price of $10/kgMS, within a forecast range of $8 to $11/kgMS.
“The expansion signal from the market is much stronger this year – recall Fonterra’s opening milk price was just $8/kgMS last year,” says Dilly. ANZ has echoed the $10 forecast. Farmers are keeping herds in production longer, with winter cow cull numbers down 8% year-on-year, as prices rise.
Favourable Feed Conditions and Fertility Rates Support Early Production
Strong winter pasture growth in drought-affected areas such as Waikato and Taranaki is providing a critical feed buffer. “
The extra feed on hand this year provides a buffer,” says Dilly. Herd performance is also contributing, with “great reproduction metrics, particularly the 6-week in-calf rate.” Palm kernel expeller imports are up 34% over the year, offering additional feed support.
Outlook for 2025/26 Dairy Growth Depends on Weather Conditions
Dilly anticipates more subdued growth this season after a record year. “It is hard to make large gains two years in a row, but with the stars aligning, growth of 1–3% should be attainable in 2025/26 if the weather cooperates.”
Regional recovery is also expected, with Southland tipped to “rebound with vigour.” Dilly says:
“If this comes to pass, it would be the second straight year of high prices and high output, a rare and very welcome combination for New Zealand’s rural sector.”