New Zealand-based Fonterra, the world's largest exporter of dairy products, said on Wednesday June 26 that dairy production in Australia due to drought led to higher costs, falling 13.7% in April from a year earlier.

Hot and dry weather in Australia and New Zealand so far limits Fonterra production this year, as rising feed prices and scarce irrigation affect the agricultural sector as a whole.

Fonterra also reported that May's milk production in New Zealand, which accounts for the bulk of its production, fell by about 0.1% compared with a year earlier. The unsuccessful result was significantly improved after a 10% fall in April due to improved weather conditions, including a small amount of precipitation.

In addition, the largest dairy producer said that the total milk yield in New Zealand for the season ending May 31 increased by 1% compared to last year, which was regarded as a weak season and predicts a stable result in 2019-2020.

The reduction in supplementary feeding, the increase in the number of rejected cows and the large number of farmers leaving the industry negatively impacted dairy production in Australia, which fell by 10% in March.