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Fonterra's New Zealand collection is 4% higher for the season to date but the dairy co-operative issued a warning about the effect dry conditions were having on the east coast of the South Island.
Farmers would be watching closely as irrigation restrictions might be put in place.
Fonterra released statistics for the seven months to December and said the collection rate was 3% higher in December than in the previous corresponding period, as well as being 4% higher for the seven months.
In Australia, collection rates were 3% lower in December but 6% higher for the season.
North Island collection in December reached 125 million kg of milk solids, 4% higher than December last season, as rain in many dairy regions supported grass growth.
South Island collection in December reached 76 million kg/ms, 1% higher than December last season.
Growing conditions had improved in Southland after a cold start to the season, Fonterra said.
''However, dry conditions are impacting pasture growth across the east coast of the South Island and farmers will be watching this closely as irrigation restrictions may be put in place.''
In Australia, following a strong start to the season, production slowed as dry conditions affected pasture growth across most of southeast Australia.
Supplementary feeding had increased due to low pasture availability and irrigation in Tasmania had started earlier than last year, Fonterra said.