NZ's Fonterra to cut current season milk volume view for dry weather

New Zealand's continued dry weather has caused dairy giant Fonterra on Thursday to cut its forecast milk production for the 2014-2015 season, prompting expectations of a lift in dairy prices on the global market.

Fonterra cut its milk volume forecast for the current season to 1.53 billion kg of milk solids, down 3.3 percent from the 1.58 billion kg produced last season and also forecast last month for this season.

Group director co-operative Affairs Miles Hurrell said in a statement that daily milk production was 6.1 percent lower than at the same time last season.

"In the first half of the season, excellent pasture conditions resulted in milk volumes being higher than the previous season," Hurrell said.

"The situation has changed significantly over the course of this month. In some regions where pasture quality has declined markedly since mid-January, we are seeing some farmers drying off cows early."

Farmers were also cutting back on feed supplements due to their expense.

Fonterra could meet all current sales commitments, but it was planning to reduce the quantity of product offered on its GlobalDairyTrade (GDT) auction platform and through direct sales channels.

Farmers in badly affected areas have said that New Zealand's second severe drought in three summers has begun and called on the government to officially declare a drought in order to release emergency assistance.

Primary Industries Minister Nathan Guy said last week that the government was closely watching the situation, but had no plans to declare a drought despite little rain being forecast in the near future. Endi