Australian dairy 2023-24 opening prices: Nine buck minimum needed

International dairy prices are climbing back and farmers say it indicates growing demand for dairy next financial year.

Processors need to pay at least $9 per kilo milk solids to farmers in June, the United Dairyfarmers of Victoria president says.

With five weeks to go until processors are required to publicly declare opening prices on their websites, Mark Billing said farmers were keen for price certainty from processors.

Last week, the headline figure for the Global Dairy Trade index rose 3.2 per cent, with an average selling price of $US3362 ($A4999) per tonne.

Leading the way was the skim milk indicator, which climbed 7 per cent to reach $US2776 ($A4128), while cheddar lifted 5.7 per cent to sit at $US4411 ($A6560) per tonne.

It was only the second positive trading session out of nine GDT events this calendar year.

Mr Billing said the recent rise in international prices was only a small part in the reasoning why processors needed to price strongly at the June 1 deadline.

“It’s very different to last season when every processor was putting out a price in the hope of attracting attention and supply. This season, the processors are watching each other and waiting for the other to come out with a price first,” the UDV president said.

“We need opening prices to be at $9.50 to $10 (per kilo milk solids). The price needs to have at least a $9 in front of it.

“The improvement in the GDT last week was welcome but it’s only one factor. Yes, fertiliser prices have come down but other input costs are rising.

“The cost of labour is going to go up next financial year, the cost of fuel, the cost of electricity. Farmers and processors need to rise prices accordingly, and that may be reflected along the supply chain with consumers paying more as well.

“The days of the farmer wearing the costs are over.”

Farmgate prices need to be around $9.50 to $10 a kilo next season, the UDV president says. Picture: Zoe Phillips

EastAUSMilk chairman Matt Trace said domestically-focused processors would have to keep their opening prices reasonably high given Australia’s shrinking milk pool.

“You could say that high diesel prices are the northern dairy farmers’ friend at the moment,” Mr Trace said.

“The economics of transporting milk from south to north mean that the playing field is more even than it was in the past.

“We’ve got a shrinking milk pool across Australia – it’s not good for the industry – but it means with the opening prices, processors will need to come out strongly to ensure supply.”

Worldwide indicators for dairy have been in decline since the start of the calendar year but recent weeks have proved more promising.

Last week, the European Energy Exchange Agricultural index showed cheddar prices remain flat, but futures prices were on the rise.

Across the Atlantic, the US Department of Agriculture’s Dairy Market News reported “prices continued their downslide” as “milk supplies continue to grow.”

“February revised production, at 17.0 billion pounds (7.7 billion kilograms), was up 1.2 per cent from February 2022,” the USDA reported.

Dairy Companies Association of New Zealand also reported milk production had picked up in December, just nudging above last season’s monthly totals.