The March 2024 Situation and Outlook Report from Dairy Australia is forecasting national milk production to grow slightly, ending the 2023-24 season close to one per cent above last season.
The report has confirmed that Australian milk production has grown in each month of this season, fuelled by better-than-expected weather conditions, particularly against lower comparable figures of last season.
Dairy Australia’s analysis and insights manager Eliza Redfern said there was an air of optimism among Australia’s dairy farmers.
“Better-than-expected weather conditions, recovering milk production, increased retail volumes and a rebound in global commodity values have bred optimism in the broader context of a persistently challenging macroeconomic environment,” Ms Redfern said.
She said the Australian domestic market continued to perform strongly for the dairy supply chain, with the volumes sold of cheese, dairy spreads and yoghurt growing 1.0 per cent, 0.4 per cent and 5.7 per cent, respectively, in the 12 months to January 28.
“Increased volumes sold across these key dairy categories will help support value retention, while inflation slows and cost of living challenges continue to drive consumer shopping behaviour.”
In terms of exports, the report said a drop in global milk supply over recent months has led to an export commodity price rebound.
Looking ahead, weak global supply growth is expected to remain the largest supporting factor, while global demand remains pressured by the challenging economic environment.
Furthermore, drought conditions affecting water availability for the Panama Canal locks and tensions in the Red Sea have caused vessel delays, tightened container availability and bloated freight costs.
“The weak global economy continues to limit importing activity from buyers in key dairy export markets, while shipping challenges along major trade routes have created an uptick in demand for Oceania, and therefore Australian, product,” Ms Redfern said.
“As global dynamics inevitably impact the Australian dairy industry, the 2024-25 season is likely to see increased pressure on farm profitability.
“After back-to-back profitable past seasons, however, Australian dairy farmers are well placed for the challenges ahead.
“Many are feeling positive about the industry, and reduced debt has helped lower exposure to high interest rates, which aren’t likely to fall until late 2024.”
For more information and to view the latest Situation and Outlook Report visit: https://www.dairyaustralia.com.au/sando