Positive trends for milk price and production in Oceania [News Oceania n°14/2020]

Period: September 28 – October 23, 2020

In Australia, milk production in August increased, recording a variation of +3.5% compared to August 2019.

According to the Dairy Australia “October Situation and outlook” report, national milk production should follow a positive trend throughout the season, helped by favourable weather, lower input costs and relatively stable milk prices.

According to USDA, profitability is believed to be increasing for many dairy producers in south and west Australia. This is attributed to lower feed costs and greater pasture health and availability.

CLAL.it - Australia Milk Production

CLAL.it – Australia Milk Production

Nuova Zelanda+2.9% milk production
Jun – Sep 2020 y-o-y

 In New Zealand, September Milk production increased by +1.7% compared to September 2019. In the new agricultural season milk production has been 2.9% higher compared to the previous year.

In recent weeks, Fonterra has revised positively the forecast of the milk price for the 2021, announcing an increase to 6.30 – 7.30 NZ$ per Kg/MS, raising the price range by 0.40 NZ$.

Comparing the price of 3.57 – 4.13 €/KgMS to the prices of European milk is obtained:

  • 26,42 – 30,56 €/100 kg of milk with 4.0% fat and 3.4% di protein weight/weight (ref. Germany)

(current exchange rate taken as reference: 1 NZ$ = 0.5657534247 €).

The drivers of this projected increase were the growth of Chinese demand, the quick recovery from COVID-19 impacts, and strong demand for WMP.

However, there are several factors that could negatively affect the milk price stability: currency exchange rate volatility, increased milk supply from the US and EU, and uncertainty as to future COVID-19 impacts and possible global economic slowing.

Price of Dairy Commodities

The price of butter in Oceania is increasing. Production is very active, as well as negotiations for future deliveries. This trend was confirmed by the latest GDT event of 20 October, where there was a lower bid of butter than the previous auction, and a corresponding increase in the average price of 3.3%.

In the last two weeks, the price of Cheddar Cheese has increased. Demand is high and the processing industry expects a similar trend also for the month of November. The last GDT event recorded a change in the average Cheddar price of +3.0%.

The price of SMP is decreasing. Operators in the sector expect the market to recover by the end of the year as a result of reduced availability and increased product demand.

The price of WMP is steady. Several analysts predict that the price will remain unchanged or slightly rising in the short term, but expect a decrease in early 2021, due to the seasonal decline in milk production and the drier climate.

The last GDT event of October 20th recorded small price changes for SMP and WMP, respectively -0.2% and +0.3%. The change in the overall average price is +0.4% compared to the previous event.

CLAL.it - Australia SMP Export

CLAL.it – Australia SMP Export

– Dairy season: July, 1st – June, 30th (Australia), June, 1st – May, 31st (New Zealand);
– Source: USDA summarized by the CLAL Team

TwitterLinkedInFacebook... share

The CLAL.it team is composed of young people who with the help of Computer Science study the dairy market and develop tools to provide the Operators of the dairy sector with a comprehensive real-time view of the national and international market trends.

Posted in Australia_, New Zealand, News Oceania EN, Oceania_