New Zealand is producing record amounts of milk this year and feeding triple the amount of U.S. distiller’s dried grains with solubles (DDGS) compared to last year, according to the U.S. Grains Council. New Zealand has purchased 113,000 metric tons of U.S. DDGS so far this year compared to just 37,000 tons imported the same time last year. While this market is currently small, these sales represent the potential for demand growth.

The 2017 milk supply in New Zealand is expected to reach 21.9 million tons, surpassing the prior record of 2014, thanks to higher-expected cow numbers and optimal pasture conditions. The dairy industry imports approximately 2 million tons palm kernel meal (PKM) to supplement pastures, and only 5 percent of the total dairy industry is currently utilizing DDGS or soybean hall pellets (SBHP) in rations.

However, the door is open for increased use of DDGS following local crop failures due to excessive rains compounded by an industry push to limit the ration of PKM due to negative effects on butter fat levels. As a result, grain buyers significantly increased purchases with two combination vessels discharging U.S. DDGS in the port of Tauranga in September 2017.