Home > Positive year ahead for Australian dairy after ‘big disappointment’ of 2012/13: Rabobank report

Positive year ahead for Australian dairy after ‘big disappointment’ of 2012/13: Rabobank report

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article image Michael Harvey

The Dairy Quarterly report of Rabobank predicts a much more positive year ahead for the Australian dairy industry after the ‘big disappointment’ of the past season.

Rabobank’s newly released report sees an improved outlook for the sector in 2013/14 with a combination of higher farm gate milk prices, better seasonal conditions and some relief in feed costs.

Rabobank senior dairy analyst Michael Harvey observed that the 2013/14 milk price had opened more than 20% up on last season’s opening price, with Murray Goulburn announcing a price of AUD 5.60/kg MS. The milk price is additionally supported by high world pricing and a weaker local currency.

According to Mr Harvey, the 2012/13 season was very challenging when excessive rainfall followed by exceptionally dry conditions and high feed costs had ushered in another contraction in the local milk pool. The preceding 2011/12 season was the sector’s strongest showing in decades.

Production

The Rabobank report reveals rapidly declining milk production volumes over the tail end of the past milk season. Production volumes were down 7.6% in May and season-to-date output was trailing last season by 2.7%.

However, production is forecast to increase marginally over the course of the 2013/14 season, despite an expected slow start.

Rabobank expects milk supply to edge up by 1% in the second half of 2013, followed by 2% in the first half of 2014, generating a small increase in exportable surplus over the period.

Outlook

The report also mentions improved confidence among Australian dairy producers on the back of better prospects for next season; however, most farmers will have to contend with difficult conditions for the next few months.

Mr Harvey explains that supply of winter feed is critically short across most key dairying regions due to poor rainfall and a late autumn break.

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