Australia’s growing population and good demand for milk and dairy products are expected to result in lower dairy exports over the next year. The trend of dairy herd reductions continues among many Australian dairy producers. It is not expected that herds will increase during the final months of this season, probably not next season either. Recent cooler weather with rain is a change from recent months.
February 2019 New Zealand milk production was unchanged from February 2018. The production trend of the June 2018 — February 2019 season is +4.4% in terms of tons of milk and +4.9% if we consider the Milk Solids (fat + protein). Cyclone Trevor has left devastation and flooding throughout the South Island and many parts of the West Coast of New Zealand. Extremely heavy rain has left some roads impassable. Milk hauling is disrupted in some areas. Forecasters are already warning about another cyclone developing this week, expected to further impact northern parts of New Zealand.
Dairy commodities prices
Butter prices in Oceania firmed. Available stocks of Butter are tighter and buying interest is strong. Australian Butter production is striving to keep up with domestic demand. New Zealand continues to be the primary source for Butter imported to Australia.
SMP prices in Oceania are lower. Spot market interest for current delivery has slowed: many buyers are set with contracts and Oceania pricing is higher than Western European pricing. Oceania SMP production has been seasonally declining and available milk is being drawn to other products, especially WMP.
Cheddar and WMP prices are stronger, due to the final months of the current milk season. Cheese production is active to meet near term contract obligations. WMP is a priority draw for milk output and current price levels are generating profits.