Milk prices have firm landing zone - industry report

DAIRY producers can look forward to another favourable season with the sector set for its fourth consecutive profitable year, according to the annual Australian Dairy Seasonal Outlook.

Rabobank says in its outlook that while the upcoming season’s milk price will likely be lower than the “lofty highs” currently being offered across parts of the southern export region –reflecting the current downturn in the global commodity price cycle – there is a “firm landing zone” expected for new season Australian milk prices.

It says this is due to stronger domestic dairy market returns, a weak Australian dollar and “aggressive recruitment and retention strategies” by dairy processors in a competitive market for milk supply.

And these are providing a buffering effect to the full extent of global pressures, said report author, Rabobank senior dairy analyst Michael Harvey.

With the June 1 deadline approaching for minimum milk price offers from Austral ian dairy companies, the bank is forecasting minimum offers for new season milk in southern Australia to be between AUD 8.50/kgMS and AUD 9.00/kgMS.

“At worst, this represents a 10 per cent decrease from 20222023 prices and a farmgate milk price that is well above the medium-term average for southern Australia since the introduction of the industry’s Dairy Code of Conduct in January 2020,” Mr Harvey said.

“Another season of historically-elevated milk prices will support farmgate margins.”

The report says there is “welcome relief” for dairy farmers from a recent record-high cost base, with lower prices for purchased feed and fertiliser flowing through balance sheets.

“Even if some dairy farmers see an easing in minimum price offers, this should come with cost relief,” Mr Harvey said.

However, the Rabobank Outlook warns, there will still be other cost headwinds on farm in 2023-2024 including higher interest rates with “labour is a major headache”.

THE market is still under pressure with five or six processors not even fielding buyers at Bendigo on Monday.

There was a cut to supply with just 9200 lambs and 2500 sheep, although quality was mostly on the plain side with the exception of a few runs of fed lambs.

All stock were cheaper with lambs another $5 to $20 off last Monday, but in reality this sale was not much worse than how the market was performing late last week.

Most of the better processing lambs showing reasonable finish and weight were between 600c to 650c/kg with just a few stand-out lines higher to around 680c/kg.

Secondary and light lambs did face a tough market and fluctuated in the 400c and 500c price brackets.

Export lambs sold to $228 for a pen estimated around 34kg cwt, but sales over $210 were limited.

The heavy 26-30kg crossbreds $170 to $204 to average around $184/head. Heavy trades $150 to

$180 and mediums $130 to $150, these domestic lambs trending between 610c to 640c.

Demand for light and secondary lambs continued to wane at $50 to $120 for the reasonable types, the poorest down to $5.

The sheep market was significantly cheaper with key buyers not active.

Heavy crossbred ewes $86 to $115 and Merino ewes to $102. The general run of reasonably presented sheep $40 to $80, but secondary lots under $20 at times.

Better mutton was in a range of 230c to 300c/kg cwt.

Crossbred Lambs

PA Condely Lake Meran (47) $228, DJ & ED Lees Rochester (130) $222, Bridgewater Park Farming Bridgewater (206) $217, WF & SG Thomas Mitiamo (17) $215, DI Gitsham & Sons Kerang (40) $204, M Borger Colbinabbin (47) $204, R Shawcross Mitiamo (25) $191, Gregwin Ridge Boort (20) $190, Kellalac Past Newbridge (40) $189, Kellalac Past Newbridge (94) g RA in Boort Grain Co-op prices Tuesday.

Wheat – H1 $358 FIS. H2 $347 FIS. APW1 $347 FIS. ASW $333 FIS. AGP1 $325 FIS. SFW1

$325 FIS. FED1 $305 FIS.

Barley - PL1 $328 FIS. SP1 $328 FIS. Bar1 $289 FIS. Bar2 $273 FIS. Bar3 $253 FIS JUNE. Bar4 $233 FIS JUNE.