Global fac­tors sup­port fi­nal price of $5.80/kg

Dairy News Australia - - NEWS -

RABOBANK HAS pre­dicted a fi­nal far­m­gate milk price for south­ern ex­port re­gions to $5.40-$5.80/ kg MS in its newly-re­leased Global Dairy Quar­terly re­port.

This far­m­gate milk price is slightly higher than the pre­vi­ous fore­cast and sup­ported by a bet­ter-than-ex­pected but­ter fat price.

Rabobank se­nior dairy an­a­lyst Michael Har­vey said open­ing prices an­nounced by south­ern Aus­tralian dairy pro­ces­sors are in line with Rabobank’s ex­pec­ta­tions.

“We ex­pect global mar­kets to re­main well bal­anced through the 2017/18 Aus­tralian sea­son, and while global pric­ing has reached the peak of the cy­cle, mar­kets are set to re­main well bal­anced for the next 12 months.”

Rabobank ex­pects to see a re­cov­ery of about 3% in Aus­tralian milk sup­ply in the com­ing sea­son.

While this rep­re­sents a “de­cent” level of sup­ply growth, Mr Har­vey said it only goes part way to­wards re­plac­ing the sup­ply lost last sea­son.

“Since the start of the 2016/17 sea­son, Aus­tralia’s na­tional milk sup­ply has fallen by more than 660 mil­lion litres, or 8%, com­pared with the same pe­riod the pre­vi­ous sea­son,” he said.

“Not sur­pris­ingly, more than 80% of that de­cline has come from Vic­to­ria and 50% from north­ern Vic­to­ria alone.”

Mr Har­vey said milk vol­ume was an is­sue con­fronting most dairy pro­ces­sors.

“The na­tional trend has seen milk be­ing pri­ori­tised over cheese, skim milk pow­der/but­ter and liq­uid streams,” he said.

Look­ing glob­ally, the re­port says the dairy mar­ket con­tin­ues to move back to­wards mod­est year-on-year milk sup­ply growth in the ma­jor ex­port re­gions.

New Zealand, the world’s largest dairy ex­porter, has started its new sea­son with ex­pec­ta­tions of healthy year-on-year pro­duc­tion growth, due to higher milk prices and com­pared with the weak level of pro­duc­tion last sea­son.

While China – af­ter dis­ap­point­ing im­port growth for the year to April – is ex­pected to be a more sub­stan­tial buyer on global mar­kets in the se­cond half of 2017 which will help keep the global mar­ket bal­anced.

“These global fac­tors should con­tinue to keep prices rel­a­tively range-bound through the fore­cast pe­riod,” Mr Har­vey said. “While de­mand growth for dairy in de­vel­oped mar­kets will re­main strong, re­duc­ing ex­port sur­pluses and coun­ter­ing more spo­radic de­mand growth in de­vel­op­ing mar­kets.”

The re­port says Aus­tralia’s ex­portable milk sur­plus had sig­nif­i­cantly con­tracted over the past 12 months.

In the pe­riod from July 2016 to April 2017, dairy ex­port vol­umes from Aus­tralia fell 2.1%.

“Trade in skim milk pow­der and but­ter has been hit hard­est due to re­duced pro­duc­tion and prod­uct short­ages in the lo­cal mar­ket,” Mr Har­vey said.

“As the sea­son winds down and the fo­cus shifts to the new sell­ing sea­son, in­ven­to­ries are low in Aus­tralia.”

Newspapers in English

Newspapers from Australia

© PressReader. All rights reserved.