Period: December 9, 2019 – January 3, 2020
milk production -3,4%November 2019 y-o-y
Milk production in Australia continues the seasonal decline. During November, milk production was 3.4 percent below November last year.
High heat records were broken in the last weeks in Victoria. Melbourne record temperatures were into the 100° Fahrenheit (38° Celsius). Current milk supplies are being impacted by the current extreme weather conditions.
Australia continues to struggle from a nationwide fire crisis. Wildfires have been burning in various areas for months. The current focal area is Victoria and New South Wales, which areas cover together approximately 78% of Australia’s milk production. It is very uncertain how long the fires will burn, or in which direction they may move in future weeks.
Ongoing drought is pushing feed and irrigation costs higher. The result is continuing disappointing margins for some Australian dairy producers.
New Zealand production volumes are still relatively high. Heavy rains have led to flood waters in some South Island dairy areas, stopping some milk collection. In areas where rain was not excessive, it helped keeping good pasture growth.
There is increasingly voiced concern from agricultural lenders about dairy producer debt. This has led to more conservative lending practices. Mitigating this, more strength in New Zealand farmgate milk prices is expected for the current season.
Market activity in both countries has been quiet during the two-week holiday period.
Dairy Commodities Prices
Butter prices in Oceania moved lower during the first weeks of December, and now are steady. Butter production in Australia is active, while New Zealand dairy manufacturers tend to send milk to WMP rather than butter.
Skim Milk Powder prices moved lower during the first weeks of December and now they are unchanged when uncommitted SMP supplies are unexpectedly available.
This decline was unexpected by many dairy industry professionals in both commodities prices. Global demand remains good.
In Oceania, cheddar prices are unchanged. Demand remains good, especially within Australia.
Whole Milk Powder prices moved lower during the first weeks of December and they have remained unchanged in the last weeks. New Zealand WMP production continues to be active. Extra milk is often channelled to WMP over other dairy products, as current production is needed to build stocks to meet demand when seasonal milk production declines further.
The Global Dairy Trade of January 7 has given a result of +2,8% in the average price of the different commodities. This increase is probably due to the lower availability of milk.
- Assessments about market trend are expressed in US$;
– Dairy season: July, 1st – June, 30th (Australia), June, 1st – May, 31st (New Zealand);
– Source: USDA summarized by the CLAL Team