International dairy prices heading upwards

The findings of Dairy Australia’s latest Situation and Outlook (S&O) Report paints a picture of a domestic industry struggling while there’s a recovery under way in the international export focused sector.

Last Wednesday Dairy Australia’s John Droppert presented the S&O findings to the Australian Dairy Industry Council (ADIC) workshop in Melbourne. The main takeaway was that Australian industry had endured a ‘full cream milk’ crisis that had now entered recovery in recent months.

Global

While the world market is looking up there is still pressure on prices for farmers supplying the domestic market.

While the world market is looking up there is still pressure on prices for farmers supplying the domestic market.

  • Global dairy supply and demand balance is better than it has been for some time and prices for most products are now above five-year average levels. While the Russian sanctions issue had not been resolved, there remains hope in the market that Donald Trump would soon bring Russia and its demand for dairy back into the fold.
  • The ongoing situation in Europe meant countries like Holland that were expanding rapidly two years ago now need to reduce production to conform with European Union (EU) rules.
  • Dairy fat with butter and other fat products continue to be the hot items with significant growth in value.

Australia

  • Australian production looks to be down by around 9pc this year to as low as 8.8 billion litres.
  • Gains made from the sales of branded products last year through the ‘I buy branded milk’ campaign continue to hold reasonably well above averages seen before the campaign, however there has been some drop-off.
  • Cheap or dumped low quality dairy products landing on our supermarket shelves will be a threat to local product.

Dairy Australia’s S&O noted that while the world market is looking up there is still pressure on prices for farmers supplying the domestic market.

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