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Dairy Australia Situation and Outlook June 2020

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 latest Situation and Outlook report describes how one of the best autumn breaks of recent times has supported a recovery in national milk production and boosted dairy farmer confidence in many regions, against a backdrop of uncertainty in dairy markets from COVID-19.

After a challenging start to the season national milk production has increased year-on-year for the past five months to April. The milk production recovery remains localised and is mainly driven by strong growth in Tasmania and Victoria. Challenges remain for farmers in some areas after two years of dry conditions and high costs.

Despite generally improved seasonal conditions, Australia is not immune to the growing headwinds facing global markets. Internationally, the spread of COVID-19 has slowed exports, upset global markets and saw commodity prices drop. Whilst the initial panic that followed the outbreak has begun to settle, global dairy demand remains under pressure.

In the latest episode of DairyPod, Dairy Australia’s John Droppert discusses insights from the latest Situation and Outlook report, including key factors affecting Australian dairy farmers and how world markets are shaping up amid COVID-19.

Keep reading

Input costs

With an early break and wet weather forecast for many regions, demand for purchased feed has decreased, resulting in hay prices easing in most regions. Improvements in both global and domestic grain production forecasts have seen pressures on Australian grain prices starting to ease.

Hay icon
prices are down -8% to -40% in most regions
since April wheat prices have eased between 7% to 22% in all regions, but continue to trade above the five-year average

National Dairy Farmer Survey

With more manageable input costs, generally favourable seasonal conditions and a relatively strong farmgate milk price this season, overall industry confidence has improved. Data from the National Dairy Farmer Survey, conducted in February, reveals that 44% of farmers were reportedly positive about the industry’s future, up 10% from last year.

positive about industry future
positive about own business

Milk production

Better conditions and improved farmer confidence have resulted in a significant recovery in Australia’s milk pool during 2020. Dairy Australia’s initial forecast for the 2020-21 season anticipates a modest rebound in milk production, up between 1% to 3%.

+1% to +3%
milk production forecast for 2020-21

Australian retail market

Following the outbreak of COVID-19, retail sales of dairy products surged, as consumers stocked up pantries and fridges in preparation for restrictions. In Australia the retail sector usually accounts for a larger share of national dairy consumption which resulted in a temporary overall increase in dairy sales at the start of the pandemic.

Disclaimer: Nielsen Homescan based on a continuous panel of 10,000 households; excludes non-private dwellings & businesses, non-permanently occupied households & out-of-home/impulse purchasing. DAIRY AUSTRALIA calculation based in part on data reported by Nielsen through its Homescan Service for the dairy category for the 4-week period 22/03/2020, for the total Australian market, according to the Nielsen standard product hierarchy. Copyright © 2020, The Nielsen Company.

Milk bottles
4.8% growth in fresh milk sales
76% growth in long life milk sales

Global economy

Quarantine measures and disruptions to everyday lives have had an extensive impact on the global economy, which looks set to contract 3% in 2020. A global economic downturn is likely to have longer term impacts on overall demand for dairy, especially in price-sensitive markets such as Southeast Asia.

global economy forecasts
Southeast Asia economy forecasts

Previous Situation and Outlook Reports

If you are interested in viewing previously published reports on the dairy industry's situation and outlook, please visit our archive.

Read previous reports
Situation and Outlook report March 2020