As at May 2013...
In exporting regions, opening price announcements for the 2013/14 season are being developed in a context of elevated global dairy prices, favourable demand and challenging production conditions. While prices for some commodities have hit fresh highs, concern is mounting around the market’s ability to bear such rapid increases in commodity prices without cannibalizing long-term demand.
The outlook for indicative southern farmgate milk prices, based on current commodity price and exchange rate expectations is for an opening price around $5.00/kgMS, up from an average opening price around $4.30/kgMS in 2012. This implies a potential full-year average price around $5.50/kgMS, up from $4.90 to $5.10/kgMS in 2012/13.
The sharp increase in commodity prices during calendar Q1 2013 suggests there is upside potential to a $5.00/kgMS opening price depending on processor carryover benefits and value-added sales late in the 2012/13 season.
Farmgate pricing expectations are indicative given the range of pricing options available to farmers, variations in seasonal pricing, incentives, manufacturer conversion costs and contract arrangements.