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Insights May 2021

11 May 2021 |Dairy
Dairy cow image

Insights May 2021

11 May 2021 |Dairy
The May 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 rainfall has improved since last month with a high likelihood of a wetter than average winter for most dairy regions.
  • Supply of cheddar continues to ramp up from the Northern hemisphere putting downward pressure on prices.

National year to date milk production is currently sitting 0.7 per cent higher compared to 2019/20 (as of April 1st). Average to below average rainfall prevailed in April across much of Southern Australia. Since last month the winter rainfall outlook has improved with a 60-75 per cent chance of exceeding median rainfall across most dairying regions. While a wet winter can present its own problems, most within the industry will take it as a positive, especially if it means good levels of soil moisture ahead of spring. South West Victoria has experienced a drier spell compared to other dairying regions over the past three months. Latest figures show milk supply for the region declined by 8.2 per cent in March.

Global dairy prices remain stuck in a pattern of plateau which began in April. Northern hemisphere supply has increased in the past month which has put pressure on cheddar prices. Cheddar prices decreased by 3.3 per cent at the first auction of May, while skim milk powder prices increased by 2.4 per cent driven by a smaller offering. Supply of cheddar is likely to increase in May driven by supply from Europe keeping downward pressure on prices. In contrast, supply of skim milk powder is expected to tail off as buying activity retreats for winter, prices will likely remain flat.

 

 

Source: Global Dairy Trade

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