Dairy in cautious mode

LOWER milk prices and varying seasonal conditions mean dairy farmers across the country remain cautious. 

The latest Situation and Out- look report from Dairy Australia says since the start of the 2024-2025 season, lower farmgate milk prices have increased margin pressure for dairy farm businesses. 

The report says milk production has continued to grow compared with last season. 

Dairy Australia analysis and insights manager Eliza Redfern said while profitability overall was strong last season, persistently high operating costs and ongoing climatic particular have been affected by drier conditions, an issue starting challenges were likely to impact milk production this season. 

“The profitability of Australian dairy farming businesses was high over the 2023-2024 season, as revealed by Dairy Farm Monitor Project data,” Ms Redfern said. 

“However, while conditions were relatively favourable in some regions, others across southern Australia began to dry. 

In the drier regions, feed inventories were drawn down heavily, contributing to the higher fodder prices seen this season.” 

Dairy farms in western Victoria, South Australia and areas of Western Australia in to impact parts of other regions after lower-than-average rainfall in October. 

In Tasmania farmers have also been impacted by seasonal conditions. 

The latest data shows up until the end of October production was tracking -4.6 lower compared to the same time last year. 

National milk production has continued to grow relative to last season, but the report says without rain, the drier conditions, lower incomes and longer-term challenges around labour and farm exits are likely to hinder further increases. 

Ms Redfern said national milk production increased 1.3 per cent year on year in October, tracking up 1.7 per cent on a season-to date basis. 

“However, given the climatic conditions, Dairy Australia continues to forecast a slight drop in the national milk pool relative to the previous season, to 8.3 billion litres in 2024 2025, with the potential to steady should drier regions receive better-than-expected rainfall,” she said.

The report also confirmed that Australian dairy products have seen their price competitiveness improve this season, coinciding with more favourable export opportunities. 

Be aware of bird flu Global demand has risen for Australian and New Zealand dairy, with higher commodity prices for fats and lower northern hemisphere production supporting higher farmgate milk prices in key export competitors including New Zealand, the United States and European Union, with farmgate prices sitting higher than Australia. 

However, buyers in most key importing countries remain price sensitive and economic constraints in China are persistent, whilst ongoing geopolitical uncertainty is also influencing global markets. 

Local market conditions have improved for Australian dairy products as well.