Dairy cooperative Fonterra says it will be able to manage through the supply-demand challenge this season.
That is despite having more milk to process, but with the reduced global demand for dairy commodities prompting Fonterra to scale back the amount of key product whole milk powder it is offering at the fortnightly auctions.
New Zealand milk production in August was 6.2 percent above year-ago levels, and Fonterra collected 4.7 percent more milk.
Global operations managing director Robert Spurway said for the whole 2014-15 season, Fonterra is expecting 2 percent growth in milk supply and is confident of being able to match supply and demand.
"In fact, we are seeing a quite good demand. We don't disclose all the details with our sales plan across the year, but we are quite comfortable we are going to be able to match supply with demand," he said.
"Of course at the moment though, there are very volatile times in the global market. We've seen production up across many of the main producers in Europe and the US and also some volatility in demand, but we are very comfortable with our position at the moment.
"The auction is just one sales channel and we are continually looking at the product mix and the customer mix that's going to maximise the value back to our New Zealand farmers."