ABARES said Australian production was expected to rise consistently to about 9.6 billion litres in the “medium term”, starting with a 2 per cent recovery next season.
Production is expected to be down to 8.8 billion litres this season, off the back of low farmgate milk prices and a previously dry season.
Farmgate milk prices are also tipped to lift slightly, and this will drive herd rebuilding. ABARES says prices are forecast to increase by 2 per cent this season to average 42.8 cents a litre, average 47 cents a litre next season and up to 50.1 cents a litres (in 2016-17 dollars) in 2019-2020 before easing the following season.
The predictions reflect a “slight depreciation” of the Australian dollar and forecast higher world dairy product prices thanks to the lifting of a Russian trade embargo later this year and increased demand from China, the Middle East and North Africa.
But United Dairyfarmers of Victoria president Adam Jenkins said farmers were not feeling as confident in forecast prices due to events in the dairy industry in the past few years.
He said profitability on-farm would dictate future levels of herd rebuilding and investment and estimated two to three years of consistency for the industry to return to where it was before it thought about growing again.
Meanwhile, industry analyst Freshagenda has downgraded its forecast farmgate milk price for next season due to weaker than anticipated commodity prices. It is now forecasting $5.80-$6 a kilogram of milk solids next season starting July 1. This is down from January’s forecast of $5.90-$6.30kg/MS.
Source: WeeklyTimes
Link: http://www.weeklytimesnow.com.au/agribusiness/dairy/abares-commodities-report-dairy-price-rise-before-dip-again/news-story/3ae9b380a66fb8b3d61243d92eb19dc6
