According to the latest NAB Dairy In Focus report, dairy prices are at their highest level since March 2014.
“It is fair to say that the speed of this recovery exceeded our expectations, and we note that export prices are now nearly 30 per cent above the long-run average level from 2010 to 2016,” the report said.
“Data showing falling milk deliveries in most major exporters has been a key driver of the recovery.
Around the world, November production was down 4.5 per cent year on year in New Zealand and October in the European Union was down 2.9 per cent year on year.
The United States remained an outlier as cheap feed corn continued to underpin lower input costs and meant production was up 2.4 per cent year on year in November.
Australian milk production plunged last year, with October deliveries down 11.4 per cent.
“Production for the first 10 months of 2016 was down 7 per cent and the ongoing impact of lower farmgate prices is clearly a major factor in lower Australian production,” the report said.
“While the rally in international markets should see some further upside at farmgate, it is unclear whether production will respond as the seasonal peak is now over.”
NAB predicted that if milk deliveries continued the pace set last year, 2016-17 seasonal production would be down 8.2 per cent to 8.7 billion litres.
From a seasonal perspective, while the Bureau of Meteorology had expected a hot, dry start to summer across eastern Australia, the picture so far has been much more mixed, with drier conditions across coastal areas of northern NSW and Queensland, but wetter than average weather in parts of Victoria and Tasmania and all of South Australia.
“South West Western Australia also enjoyed above average rainfall,” the report said.
“BoM’s three-month outlook to March continues to project below average rainfall across much of Queensland, NSW and eastern Victoria.
“While long range forecasts are naturally uncertain, a move close to El Nino this spring is generally associated with below average rainfall in eastern and northern Australia.”
Feed prices remain very low in the wake of a bumper grain and hay season across eastern Australia and NAB’s weighted feedgrain price index is at its lowest level since April 2010.
Source: WeeklyTimes
Link: http://www.weeklytimesnow.com.au/agribusiness/dairy/nab-dairy-in-focus-report-recovery-after-tough-year/news-story/aad8f15a4b8bca5af20fce6bf9b99a9b
