A recent report from Rabobank indicates that Australian milk production is thriving, with significant growth observed across all dairying regions.
The report, part of Rabobank’s Q1 Global Dairy Quarterly, revealed that from July 2023 to January 2024, Australian milk production surged to 5.35 billion litres, marking a 2.5 percent increase compared to the previous year.
Attributed to favourable seasonal conditions and strong farmgate margins, this growth has been bolstered by abundant summer rainfall, particularly along Australia’s east coast, providing an optimal environment for livestock producers.
Michael Harvey, senior dairy analyst at Rabobank, expressed optimism for Australian dairy farmers in the year ahead.
He highlighted the sustained elevation of milk prices and anticipated support for margins in the upcoming season, along with the accessibility of affordable feed resources.
“With milk prices remaining elevated, expectations are that new season pricing from July 1 will be margin-supportive,” Harvey noted.
“And there is plenty of homegrown feed in storage, and purchased feed is affordable.”
Looking ahead, Rabobank forecasts a 2.6 per cent increase in Australian milk supply by the end of the 2023/24 season, with continued growth projected for the 2024/25 season, ranging from three to four per cent.
Despite the promising domestic dairy production landscape, challenges persist in the Australian market.
“Australian household budgets remain strained, driving discretionary spending lower, which is flowing into the food basket,” he said.
However, he remains hopeful for an improvement in consumer spending as economic conditions stabilise.
“Looking ahead, we see increasing evidence that demand is on the upswing, with recessionary fears abating in some countries and a modestly-improved economic outlook,” Harvey stated.
Internationally, dairy prices have shown resilience amidst supply and demand challenges. Rabobank anticipates gradual price increases for dairy commodities, though geopolitical conflicts and shipping obstacles pose risks to global demand.
“Volumes were 8.5 per cent lower than last year, with significant declines for milk, whole milk powder and butteroil,” Harvey said.
“As milk supply grows into the new season, additional milk will be directed to manufacturing and potentially exports.”
With upcoming elections in key dairy regions, including the European Parliament and US presidential elections, potential shifts in policy could further influence dairy prices and market dynamics.
