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Situation & Outlook Report

Dairy Australia is the Australian dairy industry’s go-to source for the latest international and domestic market trends, statistics and facts, providing expert analysis and unbiased insights. 

The latest Situation and Outlook report, published in March 2022, analyses the forces influencing the global dairy commodities market, and the effect they are expected to have on the profitability of Australian dairy farms in the coming season.

Despite costs going up across the board, dairy farmers in most regions are well-placed for another profitable year ahead, with strong international demand and weak supply boosting global commodity values.

The rise in commodity prices has been driven by a shrinking global milk pool, with many key exporting dairy regions experiencing a drop in production due to adverse weather conditions, worker shortages and declining herd numbers, among other factors. 

Meanwhile, buyers in key international markets have moved to build up stocks to mitigate supply chain disruptions, exacerbated by shipping congestion, container shortages and political tensions in Europe. 

In Australia, domestic consumption has rebounded strongly over the holiday period, with foodservice sector sales up by 24% and retail sales on par with pre-pandemic levels. 
While the Australian dairy industry is not immune to broad inflationary pressures, with the impact of rising costs and margin impacts is expected to be felt across the entire supply chain, supportive market fundamentals continue to provide cause for optimism. 

With the national milk pool expected to shrink by between 1% and 3% this season, strong competition for milk is likely to continue well into next season, underpinning farm profitability. 

  • Situation and Outlook March 2022

    PDF1.08 MB

Global market

Since the start of 2022, dairy commodity prices have increased. Globally, less milk is being produced in the four key exporting regions. At the same time, global demand for dairy remains strong. With little milk available globally and logistical challenges making accessing products difficult, many buyers have been willing to pay a premium to ensure supply chain security. 

Inflationary pressures

Currently, costs seem to only be heading in one direction – up. Inflationary pressures are being noticed across the global economy, and Australia’s dairy industry is also starting to feel the impact. Grain prices remain elevated as compared to last year, while fertiliser, fuel and chemical costs have also increased. 

Previous Reports

Access previous Situation and Outlook reports from our Resource Hub.

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