UPDATE 1-Fonterra's Feb milk exports from New Zealand drop 6% on lower demand

(Adds details on results and ethanol production)

April 1 (Reuters) - Fonterra said on Wednesday its New Zealand milk exports in February fell 6.1% and that it would ramp up ethanol production to help sanitizer manufacturers cope with a surge in demand caused by the coronavirus outbreak. The Auckland-based company said it would make an additional 220,000 litres of high-grade ethanol, on top of the 375,000 litres it has already provided in recent weeks to help with the supply of sanitizer.

In February, the dairy giant saw a decline in demand for butter from Iran and fluid milk products from China, which cut into exports from New Zealand.

Domestic milk production was flat for the same period due to adverse weather conditions, while Australian production steadied in January as rainfall returned after months of dry conditions, the company added.

Accounting for the production on leap day, the world’s largest dairy exporter said its New Zealand milk collection in February was 133.5 million kilograms of milk solids (kgMS), up 0.3% on same period last year.

Dairy import volumes for China, Fonterra’ biggest market, decreased 2.1% in the first two months as measures imposed to stem the coronavirus spread affected shipments.

Reporting by Anushka Trivedi in Bengaluru; Editing by Aditya Soni and Stephen Coates