New dairy season expected to be driven by strong export demand [News Oceania n°13/2018]

Period: June 11 – 22, 2018

Australia milk production in the first 11 months of the 2017/18 season (Jul 2017 – May 2018) has always been higher than the 2016/17 season and has recorded an overall increase of 3.7%. In May 2018 milk production was +6.5% in comparison with May 2017.

Australian dairy officials expect the new dairy season will be positively driven by strong export demand. In particular, demand from China for SMP and WMP, and demand from Japan for Cheese and Butter, are expected to be very good. Current hot and dry weather conditions are a matter of concern for dairy producers, as possibly leading to higher hay costs.

With New Zealand milk production data through May now final, the 2017-18 season was very similar (+0.15%) to the previous year. Early in the season that just ended, very wet conditions let to poor pasture growth. That was followed by very dry conditions. Then late in the season there was a rebound.

In May 2018 there was an increase of +6.2% on a tonnage basis and of +5.7% on a Milk Solids basis.

Dairy commodities prices in Oceania are decreasing.

The SMP market weakened following a decision to lift offered SMP volumes at last week’s GDT event.

Oceania Butter and WMP prices are lower and below price levels in Western Europe.

Also the Cheddar Cheese price is decreasing, after the May peak. The supplies of cheese being manufactured in the U.S. and EU have allowed Buyers in Oceania to be more rigid in what they are willing to pay.