Situation and Outlook October 2016

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Dairy Australia analyst John Droppert answers some key questions surrounding the current outlook for the Australian dairy industry and factors driving the global market. Listen here:

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Overview

  • Global dairy commodity prices have increased 20% as the market rebalances; some consolidation is likely.
  • Internationally, demand is presenting a mixed picture, with China returning to growth, while other markets are more sluggish.
  • Australian farmers face an ongoing margin squeeze, and milk production will likely be lower in 2016/17.
  • The first two months of this season have seen significant year-on-year declines in national milk intakes averaging 9%, but this is expected to moderate as the benefits of good rainfall and lower input costs accrue. However, the full impact of flooding across several regions is yet to be determined.
  • The domestic market continues to evolve, as consumers pursue more natural products and look to support farmers