Dairy exports 2023-24

Dairy commodity overview

• Australian dairy export value lifted $69 million (+2.2 per cent) in 2023-24 to a total of $3.1 billion.
• Increased value of exports was primarily driven by increased volume of dairy solids exports. The average export price of dairy solids fell year-on-year but remained one of the highest on record.
• Dairy export value is forecast to decline in 2024-25. Lower farmgate prices improve export competitiveness, but flat to lower production and lacklustre global prices will temper upside.

Trade performance in 2023-24

The $3.14 billion worth of Australian dairy products exported in 2023-24 was the third highest on record. It represented a year-on-year increase of 2.2 per cent and was 13.6 per cent above the five-year average. The primary driver of increased value was a lift in the volume of dairy solids.

The value and volume of fresh milk and cream products fell 4.5 per cent and 23.5 per cent year-on-year respectively. The 181.8 million litres was 34.7 per cent below average, and value of $315.7 million was 6.0 per cent below average. The average price per litre lifted 24.8 per cent to a record high $1.74 per litre, 39.5 per cent above the five-year average. In contrast the value and volume of dairy solids and 'other' products lifted year-on-year. Total value lifted 3.1 per cent to $2.82 billion, the third highest total on record. Volume of 461,000 tonnes was up 15.3 per cent, but only 2.7 per cent above the five-year average. While the average export price fell 10.6 per cent to $6,126/tonne in 2023-24, it was the second highest on record behind the previous year. Exports of cheese and curd made up 35.7 per cent of total value of dairy exports and were the major contributor to lifts in dairy solid exports. The total value of cheese exports reached a record high $1.21 billion, with volume lifting 17.5 per cent year-on-year to 151,000 tonnes. The average export price of $7,435/tonne, while down 4.5 per cent year-on-year, was the second highest on record. This result wasn't consistent for all dairy solids products though. The total value of Skim Milk Powder (SMP) exports fell 8.8 per cent despite volume lifting 21.8 per cent. This was a result of the average export price declining 25.1 per cent to $5,493/tonne. Despite the decline, this price was still 8.7 per cent above the five-year average.

Reduced Chinese demand for milk powder drove decreased Australian export value. China is typically the world's largest importer of dairy exports but increased domestic production led to an oversupply of milk powders. This has impacted global demand and saw global milk powder prices below average for most of 2023-24. Record high farmgate prices also impacted Australian dairy exports. This was particularly relevant to the decline of fresh milk and cream exports. Australian farmgate prices averaged around $9.51/kg MS in 2023-24 were around 33 per cent higher than New Zealand's. This resulted in not only reduced Australian exports, but also increased imports.

Last season saw a record high ratio of imports to export of 61.9 per cent. Improved global prices saw the ratio ease 9.3 per cent to 52.6 per cent in 2023-24. But the $1.65 billion worth of dairy imports is the second highest on record behind the previous year. The total value of cheese, butter and other milk product imports were all second highest on record. While the 100,000 tonnes of cheese imported was the fourth highest total, average export price of $8,643/tonne was second highest on record. Similarly, butter imports of 41,000 tonnes were third highest, but average export price of $8,301/tonne was second highest on record. New Zealand was the primary source of Australia's dairy imports with 59.7 per cent share. The $887 million worth of imports, while down 15.4 per cent year-on-year, was 13.6 per cent above average. Butter and cheese products made up 66 per cent of import value from New Zealand, with milk powder a further 28 per cent.

Major export markets

While the rankings have changed from year to year, the list of Australia’s five most valuable markets has remained unchanged for thirteen years.

China maintained its status as Australia's most valuable destination for dairy exports with 29 per cent market share. Export value of $911 million, while down 17.8 per cent year-on-year was more than double the second most valuable market. China has been the largest consumer of Australian dairy products since 2017-18. However, 2023-24 broke an eight-year consecutive run of increasing dairy export value. On average, milk powders make up 61 per cent of Australia's dairy exports to China by value. Reduced demand for milk powders saw value and volume fall 25.2 per cent and 30.7 per cent respectively. High Australian farmgate prices saw reduced Chinese appetite for fresh Australian dairy. The value of milk and cream exports fell 12 per cent for a third consecutive year-on-year decline. Volume fell 41 per cent year-on-year to 65 million litres. This is the lowest amount in nine years and 52 per cent below average. Despite shrinking appetite, Australian dairy export value to China in 2023-24 was still the fourth highest on record.

Japan held its spot as Australia's second most valuable dairy export market for the seventh year in a row. Export value of $452 million was 14.4 per cent of market share, and 4.4 per cent above average. Japanese imports are dominated by cheese, making up 94 per cent of all dairy imports in 2023-24. The average price of $6,736/tonne was down 9.2 per cent year-on-year. But this was more than offset by an 18 per cent lift in volume which saw total value of cheese exports lift 7.1 per cent to $423 million. The Japanese market tends to value quality, which sees demand remain relatively consistent despite price fluctuations.

Indonesia purchased $248 million of Australian dairy products in 2023-24 with 7.9 per cent market share. Indonesia has been the third most valuable dairy export market for the last three years. Total value in 2023-24 fell by a marginal 0.8 per cent year-on-year but is 26.2 per cent above average. SMP made up around 65 per cent of Indonesia's dairy purchases from Australia. Indonesia took advantage of below average SMP prices to purchase 40,000 tonnes in 2023-24. This was a 49 per cent increase on last season and the third highest total on record.

Malaysia and Singapore rounded out the top five most valuable dairy export markets with 6.9 and 6.1 per cent market share respectively. Trends seen in these markets were broadly consistent throughout the rest of the top ten. Total value lifted year-on-year, and all were above average. While not specific to each, generally export value and volume of fresh milk and cream were lower on 2022-23 numbers. In the cases of both Malaysia and Singapore, both value and volume of dairy solid exports increased year-on-year. This was driven by the average export price per tonne of all dairy solids products being either second or third highest on record.

Outlook for 2024-25

The total value of Australian dairy exports is forecast to decline slightly in the 2024-25 season. Available supply will be a key determinant to Australia's dairy exports in the coming season. Local supply is forecast to be flat to slightly lower in the 2024-25 season. With the milk pool more competitively priced than last season, imports of dairy will fall. But this will also have the effect of reducing exportable surplus as more milk is consumed domestically. This is a broad shifting in the Australian market. Declining production is seeing the balance of imports and exports recalibrate over the longer term. Global production is expected to remain stagnant. While this is supportive for demand for Australian products, global demand is also relatively tepid. Chinese demand will remain subdued and high inflation in other key export markets will continue to weigh on appetite for dairy products. This will particularly weigh on milk powder prices which are likely to remain around or below average. Lacklustre global production and export demand is expected to see some volatility in global dairy prices. A preference for Australian products from some quality conscious export consumers will see demand remain. This will be the case particularly for higher end products in butter and cheese. Farmgate prices more aligned with export competitors will help capture export demand. However, flat outlooks for global prices, global demand and local production will likely see the value of Australian dairy exports ease in the coming season.

Source: Global Trade Atlas (GTA)

Source: GTA

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