Forecast predicts dairy comeback on the way
AFTER a difficult 18 months, the Australian dairy sector is expected to start “climbing back off the canvas”, with local dairy farming businesses expected to see a much-needed return to profitability in the 2017/18 season, according to a recently-released report.
The Australian Dairy Sector – Climbing Off the Canvas, by agribusiness banking specialist Rabobank, says extenuating circumstances have meant the recovery in global dairy markets is yet to flow through the value chain.
However, some of the forces should dissipate in 2017/18, and this will help deliver higher full-year milk prices for Australia’s dairy exporting regions.
Based on Rabobank’s latest commodity price forecasts (outlined in its upcoming Global Dairy Quarterly) and assuming a currency rate of USD 0.75, the report says the global market would deliver an average commodity milk return equivalent to AUD5.30/kgMS in 2017/18.
While the prospects of global commodity prices remaining elevated throughout next season are sound, the report warns there are some risks to the commodity and currency outlook, which need to be carefully monitored.