Australia: less milk and more flexibility to adjust products mix [News Oceania n°4/2016]

Period: February 08 – 19, 2016

AUSTRALIA

• Milk production: dry conditions and tighter margins for the farmers affected feeding, leading since October to a milk production lower than last year.
• Milk Producers: the number of culled cow is higher. Factors are higher beef prices and margin pressures for producers. Higher hay fodder prices are not expected to decline until winter.

NEW ZEALAND

• Milk production: the current situation interrupted a trend that has been increasing for many years.
• Weather situation: rains within the past week are offering hope of improvement in pastures.
• Milk Producers: pasture growth slowed, adversely affecting milk production. More cows are being culled to help producer margins.

MILK PRODUCTION

• Australia *: +0.19% (Jul-Dec 15 vs. Jul-Dec 14)
• New Zealand *: -2.67% (Jun 15 – Jan 16 vs. Jun 14 – Jan 15)

BUTTER (82%): minimum prices decreased, reflecting lower regional butter demand: indeed, much butter currently produced is being consumed domestically. Cream is increasingly going to other uses. Export sales are slower.

CHEDDAR CHEESE: prices decreased, more at the bottom of the price range than the top. Bottom levels reflect more the spot pricing. Higher pricing is more supported by long term commitments and relationships with preferred sources.

SMP: prices unchanged. The upper end of the price range tends to represent smaller volumes of higher spec specific origin Australian product. With volumes of older SMP in storage, current production is low.

WMP: prices decreased. New Zealand WMP production has been higher than expected, and now is weighing on markets.

A small but growing market is sales of WMP at retail in 1kg sachets. Some supermarkets have dedicated store displays. Demand is domestical as well as from tourists who carry it when traveling to Asia.

In Australia lower milk production resulted in an higher flexibility for the processors to adjust products mix. This has helped buffer the impact of lower commodity prices by optimizing returns.

CLAL.it – Australia: Exports of the main dairy commodities

CLAL.it – Australia: Dairy commodities export share

CLAL.it – Latest GlobalDairyTrade auction results [February 16, 2016]

Note: · Assessments about market trend are expressed in US$; · * Dairy season: July, 1st – June, 30th (Australia), June, 1st – May, 31st (New Zealand).

Source: USDA summarized by the CLAL Team

More informations about milk production in New Zealand and Australia are available on CLAL.it