Australian milk production growth

Milk production in Australia is growing faster than in any other major export region and it is the only region where production is expected to expand more than 2% in the coming 12 months.

High milk prices, low feed costs and improved availability of irrigation water in recent years helped underpin a 5% expansion in production in the 2014-15 season.

That growth was set to continue this season and Rabobank was picking it to be a little over 2%, the bank's latest dairy quarterly said.

While milk prices in many regions were approaching or below break even, Australian dairy farmers were likely to be ''moderately profitable'' in the current season.

With production growth set to outstrip local market needs, exportable Australian surplus was set to rise almost 4% over the next 12 months, adding 145 million litres to the international market.

But Australia was also the region most at risk from the current El Nino weather pattern, which often led to lower rainfall in key production regions.

Rabobank expected the market for new milk to tighten in the first half of 2016, as low milk prices in New Zealand and further price falls elsewhere put the brakes on milk production, while demand would rise as falling prices were passed on.

Before that triggered a substantial price recovery, the world must first consume the ''proverbial mountain of milk'', notably milk powder, that had accumulated during the market downturn.

 

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