Will 2021 be a happy new year for dairy exports?
The Lunar New Year usually heralds increased demand for Australian dairy products — but what can we expect in this Year of the Ox? We ask an expert.
ASIAN demand for dairy produce has led to a new year bounce of almost 4 per cent on international dairy markets.”
Last week’s Global Dairy Trade headline result was a jump of 3.9 per cent – equating to an average price of $US3420 ($4410) – the fourth consecutive rise on the worldwide exchange since mid-November.
Butter led the way with a 7.2 per cent jump to an average price of $US4526 ($5832). Prices for milk powder are up – skim up 4.1 per cent – $US3044 ($3922) and whole milk up 3.1 per cent – $US3306 ($4260).
Dairy Australia analysis manager John Droppert said Asian markets, most notably China, had maintained their demand for dairy.
“(The latest GDT figures) were solid results. With the upcoming Chinese new year, there’s usually an increase in demand for dairy, both in the lead-up and during that holiday season,” he said. “This year looks like following that trend from previous years.
“On the supply side, New Zealand has tapered off slightly. Conditions are drier than usual on the North Island, but saying that, the South Island is having an OK season.
“Europe and North America remain the great unknowns, with coronavirus and the impact on demand, as well as what actions governments in various countries take.”
In a report released last month, Rabobank analyst Michael Harvey suggested direct or indirect government intervention in agriculture would play a key role in determining dairy prices heading into 2021.
This week, US Secretary of Agriculture Sonny Perdue announced the US Department of Agriculture would purchase an additional $1.5bn worth of food for nationwide distribution through the Farmers to Families Food Box Program.
“The USDA’s extension of the Food Box initiative is a significant move – there have been some big purchases of dairy as a result of that program,” Mr Droppert said.
Dairy Connect president Graham Forbes said four consecutive GDT price hikes should flow to the farm gate.
The major processors – Saputo, Fonterra and Bega – did not increase average farmgate prices in the first half of the 2020-21 financial year, although smaller players such as Bulla posted a step up.
“Given Victoria has that export focus, there should be a step up as a result of the strong international prices. That would have a flow-on effect to NSW and the other states,” Mr Forbes said.
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