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Insights June 2021

7 June 2021 |Dairy
Dairy cow image

Insights June 2021

7 June 2021 |Dairy
The June 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.

Commodity Overview

  • The outlook for 2021/22 milk prices is positive, increasing by 4.5 per cent compared to this time last year.
  • Demand for cheddar to increase this month as South East Asia begin to buy larger quantities.
  • Skim milk powder prices to decline as the ‘off season’ for milk powder begins.

Processors have lifted 2021/22 opening milk prices by an average of 4.5 per cent compared to last season. Analysis from seven major processors returned an average minimum opening price of $6.62/kg MS. Early indications suggest an average maximum closing price of $6.96/kg MS. The increase in opening milk price reflects strong competition for milk amongst processors. Milk production remains flat despite exceptional seasonal conditions. Yet, demand for finished products is increasing, hence the need for processors to remain competitive on price. In historical context, the 2021/22 mid-point price of $6.75/kg MS ranks as a decile 7.8 over the past ten years. This is the same decile as the 2020/21 mid-point price of $6.46/kg MS.

Of the major processors, Bega showed the highest price increase compared to 2020/21. Bega’s opening price of $7/kg MS for northern suppliers is $0.45 cents higher than this time last year. Southern prices have increased by $0.40 cents over the same period.

Global dairy prices remained flat over the past two auction events. Cheddar prices increased by 0.3 per cent at the first auction of June. Over the same period, skim milk powder prices decreased by 0.7 per cent. Demand for cheddar increased compared to previous auctions. South East Asia was the major purchaser, almost doubling volume from the previous auction, indicating the start of the buying season for South East Asia. Volume was 40.6 per cent higher than the same auction in June 2020. Future auction results will decide if this is a sustainable increase or the start the buying season a month early.

The volume of milk powder sold to North Asia declined in the first auction of June. Prices for skim milk powder declined as a result. North Asia purchases less milk powder from June to August. Prices are likely to ease this month, yet demand remains higher than this time last year. This may cause prices to taper opposed to large declines.

 

 

 

Source: Global Dairy Trade

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