Fonterra is on track for record production for the 2010-11 season, thanks to some of the best autumn weather conditions in recent years.
With two weeks of the season still to go, production was more than 4% ahead of the corresponding time last year, when much of the country was experiencing dry or drought conditions, general manager milk supply Steve Murphy said yesterday.
"Exceptionally favourable" pasture growth conditions since January meant shareholders had enjoyed strong production around the country, particularly north of Taupo.
"This is a real turnaround from earlier in the season, when many of our farmers were struggling with a cold and wet spring.
"This, coupled with an early-December drought, depressed production levels dramatically," Mr Murphy said.
It was a tough start to the season due to the northern drought and farmers then had to cope with more drought, floods and snowstorms.
But recent pasture growth meant herds were now in good condition, which boded well for calving and the start of the new season.
Additional milk would be welcomed in the market where supply remained tight, Mr Murphy said.
Prices for globally-traded dairy products, while off their highs of early March, were still at historically high levels.
That meant farmers were on track to enjoy another good season, which would flow through the economy, he said.
While it had been cold and wet, it was a "good season all round" and farmers in the South were "pretty happy", Federated Farmers Otago dairy chairman David Wilson said.
It was going to take a little time before the current commodities boom flowed through to the rest of the economy. Farmers were trying to get themselves in a better position, paying off or reducing debt, Mr Wilson said.
Fonterra recently reported its highest month for exports, with 229,000 tonnes of its dairy products leaving New Zealand shores in March.