Dairy Australia Situation and Outlook October 2019

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As high input costs continue to pressure dairy farmers, 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 Situation and Outlook report ensures farmers and the industry have access to current market insights and future projections to inform farm business decisions.

Australian dairy farmers have entered a season of record farmgate milk prices but are challenged by high input costs and an outlook for dry conditions for the rest of the year with those in northern Australia facing a second year with few feed options available.

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Farmers, particularly those in drought-affected areas, are urged to connect with Dairy Australia's regional teams who offer a range of programs and resources to assist in the decision-making process.

Listen to episode 11 of Dairy Australia's podcast to hear Trade and Industry Strategy group manager Charlie McElhone discuss key report insights with industry analyst Sofia Omstedt.

Download here - Situation and Outlook October 2019 (pdf, .5 MB)

Input costs

In nearly all dairy regions, the price of hay remains 20% to 50% above the five-year average. While the price of wheat has eased 5% to 45% year-on-year in most regions, the current price remains higher than the five-year average. This is the case in all states except for WA, which is more closely linked to the export industry.

Milk production

Australian dairy famers have entered a season of record farmgate milk prices but are challenged by high input costs and an outlook for dry conditions for the rest of the year.

3% – 5% YOY decline in milk production forecast for 2019-20

8.3b – 8.5b litres predicted in 2019-20

Global demand

Markets are well placed to absorb additional supply as global demand for dairy remains robust. In 2018-2019 world exports of dairy grew 4.5% to 12 million tonnes, a new global trade record. This was underpinned by increased imports into China and Southeast Asia, up 7.2% and 10.2% respectively.

Australian grocery market sales

Milk and spreads

In Australian supermarkets, higher prices of dairy products have delivered value growth for all major dairy products. While volume growth is subdued, consumers have proved happy to pay a premium for speciality products, which is driving additional value creation.

Milk - YoY value growth of +2.8%

Spreads - YoY value growth of +3.0%

Cheese and yoghurt

Yoghurt and cheese volumes were steady while values grew, as consumers proved happy to pay a premium for specialty products, including health-style yoghurts and deli-cheeses.

Cheese - YoY value growth of +3.4%

Yogurt - YoY value growth of +2.1%

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