Australia’s milk production in the hands of God

THE topsy-turvy job of milk production is in the hands of Mother Nature, global commodity trends, and domestic consumer demand, just like most farming enterprises, although dairy does at least have a regular cashflow – it’s not a once a year return such as beef, lamb and crops.

Like all farming activities, input costs continue to have an impact, although stabilising more recently.

Farmgate milk prices are projected to remain steady in coming months at around $8.10/Kg which is a significant reduction to last season where strong competition between processors saw up to $9.51/Kg MS.

Rabobank newly-released Global Dairy Quarterly predicts that Australia’s milk production will continue to recover as global supply is forecast to grow at a modest rate in the coming year.

In the Q3 report, titled “Market Narratives are Shifting”, the global agribusiness bank says positive, though modest, milk supply growth is expected from the world’s major dairy exporting regions through the remainder of 2024 and in 2025.

Meanwhile, milk production in Australia in the 2023/24 season, which ended in June, was 3.1 per cent higher on the previous year at 8.4 billion litres which was an increase of 249

million litres.

However, the bank is expecting Australian production to grow at a lower rate in the 2024/25 season, currently forecast at 1.5 per cent.

RaboResearch senior dairy analyst Michael Harvey said Australian milk supply growth had been widespread, with production expanding in all states and regions, with the exception of western Victoria where dry conditions have constrained production.

“New South Wales had led the charge, recording impressive growth of 5.3 per cent in milk production for the

2023-24 season.

“Seasonal conditions remain mixed though across the key dairying regions with severe rainfall deficiencies so far in 2024 for western Victoria and South Australia, which are sizeable milk production regions.”

The global dairy market remains “balanced, but sensitive to change”, the report states.

The next year could see significant shifts as production increases and markets adjust.

Milk production from the main global export regions had been elusive over recent years, Mr Harvey said.

“Since the second half of 2021, combined milk production from the Big-7 dairy export regions, the EU, US, New Zealand, Australia, Brazil, Argentina and Uruguay, has only grown in three quarters,” he said.

However, high dairy prices in the first half of 2024, plus lower feed costs, have improved farmer margins, encouraging production.

RaboResearch expects milk supply from the major exporting regions to increase a modest 0.14 per cent in 2024 on the previous year.

“With producers seeing improved margins though, milk supply could make a distinct shift upward in 2025,” Mr Harvey said.

“Our initial forecasts for 2025 suggest a 0.65 per cent year-on-year production lift from the Big 7, bringing global milk supply from these regions above the five-year average.”

There have been no major changes to Australian farmgate milk prices since the new season announcements were made, the Rabobank report stated.

“Across the southern export regions, milk prices for those not under contract have fallen more than 10 per cent compared with the previous season,” Mr Harvey said.

“In contrast, milk prices in regions producing drinking milk for the domestic market are mostly unchanged.”

Australian dairy exports finished the 2023-24 season on a high note, the report stated, helped by increased milk availability and led by strong growth in cheese, skim milk powder and whey.