Positive forecast for upcoming season

A new market outlook report by Rabobank highlights the positive prospects for Australia’s dairy sector heading into the upcoming season. The report acknowledges that the market dynamics in the country’s dairy sector are currently stable, with commodity prices and export returns for bulky dairy ingredients showing improvement ahead of the new season set to begin on July 1st.

Despite facing global challenges related to trade and economic uncertainties, the Australian dairy sector is seen as having a solid foundation for the future. The report notes that domestic dairy market returns continue to be strong, even amidst deflationary pressures. However, the uncertainty in the global market is a cause for concern, as it may impact dairy demand in the coming months.

RaboResearch senior dairy analyst Michael Harvey emphasized the need for dairy companies to carefully navigate the challenges presented by the current global backdrop. While the fundamentals support the expectation of higher farm gate prices for dairy producers, the potential impacts of global trade turbulence and economic headwinds must be taken into consideration.

Recent tariff measures implemented by the US administration have added to the complexity of global markets, creating further uncertainties for dairy demand both locally and in Australia’s export markets. Despite these challenges, there is confidence that minimum prices for dairy products will remain elevated, with the potential for prices to reach $9/kg MS in southern Australia.

Looking back at the previous season, the report highlights the improved performance of the dairy commodity basket compared to the prior year. The prices of cheese and skim milk powder (SMP) are particularly crucial for the industry due to the product mix in Australia’s dairy sector. Overall, the sector is expected to stay competitive, but companies will need to be vigilant in managing potential risks that could impact market performance throughout the upcoming season.