The model, which includes a weighted cost and income index, tightens for the coming six months due to lower contracted Global Dairy Trade prices and higher Australian Securities Exchange grain futures.
Looking back, the 2013-14 season for the export dairying regions showed a larger margin — a sign of improved profitability, according to Dairy Australia.
Dairy Australia commercial research and analysis manager Norman Repacholi said the model would provide an insight for farmers who could then alter their business to adjust for tighter or improved margins.
It would highlight the net impact of market changes for export-region dairy farmers.
He said the model, which is new to Dairy Australia’s Situation and Outlook report, showed higher costs due to grain prices.
Global Dairy Trade prices have declined from near-record highs in early February.
Last week the online auction dropped another 1.8 per cent to average $US3873 a tonne. Whole milk powder prices fell by 1.1 per cent to $US3877/tonne.
Forward contract prices for WMP remain depressed until November, when values increase 2.6 per cent.
WMP prices are expected to fall 2.3 per cent in July and then improve slightly until November.
Dairy Australia’s export region weight cost and income indices showed periods such as July 2012-March 2013 and July 2009-March 2010 where costs sat higher than prices.
From March 2011-November 2011, and for all of this past season, prices have remained above costs.
Source: Weekly Times