Drought hits Fonterra's Aussie milk output

Fonterra's NZ milk production rose in December due to favourable weather, but drought continues to bite its Australian business.

Fonterra's NZ milk production is up, but drought continues to bite its Australian business. (AAP)

Dairy producer Fonterra says its monthly New Zealand milk production was up four per cent in December due to favourable weather.

But Australian milk production decreased six per cent in October from a year earlier owing to drought, high input costs and increased cow cull rates, the company said in a statement.

International milk prices have continued to recover, marking a two-month rising streak at the most recent Global Dairy Trade auction on January 16 after falling most of last year.

Last month, the world's largest dairy exporter downgraded its forecast milk payment to farmers due to lower global dairy prices.

The Auckland-based company's business in Australia has been affected by drought as the country had its third-warmest year on record in 2018.

Shares of Fonterra were up 0.21 per cent in early trading on the NZX.

The stock has risen about 1.7 per cent so far this year after having fallen about 27 per cent in 2018.