Friday, March 29, 2024

Australia forecasts lower world dairy prices

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The Australian Department of Agriculture has released its latest quarterly report on agricultural commodities. 
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World dairy prices have declined through 2014-15, as a result of reduced demand from major importing countries and increased milk supplies in key exporting countries. The Department of Agriculture expects continued weak import demand for dairy products and a further increase in global milk supplies in the 2015-16 season. Its forecast result is a 5-14% fall in world dairy commodity prices (on-year-average terms).  

Whole milk powder (WMP) and skim milk powder (SMP) prices are forecast to decline by 14% and 11% respectively, resulting in prices of US$2400/t for WMP and US$2300/t for SMP.

A forecast of lower world dairy commodity prices and higher Australian milk production means the Australian farmgate milk price is forecast to fall by 6% in the 2015-16 season, to average AU$0.42/litre. While the national dairy cow herd is expected to drop by 0.3%, an increase in the milk yield per cow is expected to increase production by 0.7% to 9.8 billion litres.

Likely lower returns from WMP means that manufacturers are focusing more on cheese, butter and SMP. Australia's WMP production is expected to fall to 90,000t in the 2015-16 season, 10% less than the previous season. Increased butter production (+6.2%) is expected to meet increased domestic demand. Increased cheese production (+2.1%) and SMP production (+4.3%) will be directed to export markets in Asia. 

Access the Australian Department of Agriculture's Agriculture Commodities report here. 

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