Oceania: increase in dairy prices [News Oceania n°17/2016]

Period: August 8 – 19, 2016

AUSTRALIA

• Milk producers: some Australian dairy cooperatives set estimated milk pay prices in advance, subject to later adjustment. As a consequence, many dairy producers in Australia recently had their milk prices retroactively reduced for the final two months of the 2015/16 season (May and June), leaving many owing a debt to the processor, in a tough financial situation. National awareness is now growing beyond the agricultural sector into more general broadcast news, and Australian Prime Minister became involved. While the situation is under discussion, many producers are culling herds and/or seeking other processors.

NEW ZEALAND

• Milk production: a major cooperative, Fonterra, estimated a decline in milk production by 3% for the current season. Nevertheless, Fonterra milk production in July 2016 was close to the previous year level.

MILK PRODUCTION

• Australia *: -1.98% (Jul 15 – Jun 16 vs. Jul 14 – Jan 15, June data are provisional)
• New Zealand *: unchanged (Jun 16 vs. Jun 15)

BUTTER (82%): prices increased, supported by EU butter prices. Milk production is still moving toward the peak and that is a factor in keeping butter production at current volumes. At GDT Event on August 16 the all contract butter price increased by 14.1%.

CHEDDAR CHEESE: prices increased significantly, reflecting decisions by regular customers to add to stocks of cheese for later year consumption: a typical pattern. At GDT Event on August 16 the all contract cheddar price increased by 8.9%.

SMP: prices increased. At GDT Event on August 16 the all contract SMP price increased 3.0%.

WMP: prices increased significantly. At GDT Event on August 16 the all contract WMP price increased by 18.9%. Much of the buying interest came from China and Southeast Asia. Another factor supporting prices is awareness of declining milk production in the EU, as well as the fact that seasonal milk production in Oceania is still a few months away from peak.

Many dairy producers in Australia recently had their milk prices retroactively reduced for the milk delivered in May and June 2016. The TV programme “Four Corners” for ABC Australia reported that, as a consequence, one saleyard in the state of Victoria has been selling around 700 dairy cows a week to abattoirs since the end of May.

In New Zealand, at GDT Event on August 16 the average prices ranged from 2.5% to 18.9% higher from the prior event across categories. Meanwhile, Fonterra reported a milk production close to the previous year level.

CLAL.it – New Zealand: latest GDT event results (August 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