New Zealand’s got milk -- record amounts of milk production -- and the country’s dairy industry is feeding triple the amount of U.S. dried distillers grains with solubles (DDGS) versus the year before, the U.S. Grains Council (USGC) reported.

The 2017 milk supply in New Zealand is expected to reach 21.9 million tons, surpassing the prior record of 2014 due to higher expected cow numbers and optimal pasture conditions. The dairy industry imports approximately 2 million tons of palm kernel meal (PKM) to supplement pastures, and only 5% of the total dairy industry is currently utilizing DDGS or soybean hall pellets in rations.

However, USGC said the door is open for increased use of DDGS following local crop failures due to excessive rains, compounded by an industry push to limit the ration of PKM due to negative effects on butterfat levels. As a result, grain buyers significantly increased purchases, with two combination vessels discharging U.S. DDGS in the port of Tauranga in September 2017.

New Zealand has purchased 113,000 metric tons of U.S. DDGS in the 2016-17 marketing year (September to July), up significantly from the 37,000 mt imported during the same time the prior year. While this market is currently small, USGC said these sales represent the potential for demand growth.

“This record production is translating into higher U.S. DDGS demand for the New Zealand dairy sector,” said Manuel Sanchez, USGC regional director for South and Southeast Asia. “We expect to see strong demand for U.S. DDGS into this market in coming years as the dairy industry incorporates more co-products into their feeding programs.”