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Insights February 2020

3 February 2020 |Dairy
Dairy cow image

Insights February 2020

3 February 2020 |Dairy
The February update provides an analysis of production and pricing trends for Australian dairy producers. It provides producers with a timely overview of current trends and an outlook for the coming months.

Overview

  • Uncertainty regarding the impact of Coronavirus on the Chinese economy is driving some volatility in global dairy
    markets.
  • Global dairy supply is forecast to increase, as increases in the United States, European Union and New Zealand offset reductions to Australian milk production.

The outbreak of Coronavirus has created some uncertainty in the Global Dairy Trade (GDT) market, reflecting concerns around the economic impact of the virus on Chinese and global markets. Fortunately, however, underlying Chinese
demand for dairy products appears to have remained steady.

Global dairy supply is forecast to be one per cent higher this season, led by growth in United States and European Union supply.

New Zealand production is also forecast to increase, albeit only 0.4 per cent year-on-year. Australian production continues to trend lower year-on-year and is forecast to finish the season 3-5 per cent lower, largely due to a reduction in herd size.

Saputo have announced a step up to their farmgate milk price, lifting their farmgate milk price in southern milk region to $7.05/kg milk solids up 10c/kg. The declining Australian milk pool continues to drive heightened competition between processers to secure supply.

The weaker Australian dollar is favourable for local values, improving the relative competitiveness of Australian dairy exports in global markets.

The winter grain harvest has alleviated some pressure from local feed markets, and feed prices are expected to remain flat for the coming months. Increased rainfall may lead to a slightly softer tone if significant and widespread rains were to eventuate.

    

Source: Dairy Australia, Global Dairy Trade

 

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