Australian milk pool: Dairy Australia forecasts moderate increase

Dairy production decline across Australia appears to be at an end with new figures predicting a seasonal upswing.

Australia’s milk pool is stabilising in 2024.

Evaporation of Australia’s milk pool is finally abating with a forecast of a 725 million-litre boost this season due to favourable financial and climatic conditions.

Released today, Dairy Australia’s situation and outlook report estimates a one per cent rise in Australia’s milk production to clock in at 8.2 billion litres by June 30.

If it eventuates, the prospective milk pool tally means the industry hit an output nadir in the 2022-23 financial year of 8.125 billion litres.

The last time the national pool was around that figure was back in the 1994-95 season when it tallied 8.2 billion litres.

Dairy Australia industry analyst Eliza Redfern said increased retail volumes and a rebound in global commodity values had injected optimism into the sector.

But she said the leading driver of the milk pool stabilisation was better-than-expected weather conditions, after a rough 2022-23 season slashed output.

“Certainly, the 2023-24 season has been challenging for some farmers but as of March, this season has been better-than-expected taking a national view,” Ms Redfern said.

“We’re forecasting that by June, the national milk pool will be about one per cent ahead of what it was at the same point last year.

“Apart from weather, strong farmgate prices have given farmers greater business confidence and that rebound in global prices means financially, there’s reason to see that small rise in the national milk pool this season.”

In Dairy Australia’s quarterly snapshot, Ms Redfern noted weakened demand for supplementary feed had resulted in prices dropping below last year in many regions.

Queensland’s Atherton Tablelands and southwest Western Australia were the exception to the rule with conditions much drier than the rest of the nation.

“Cheaper water has really been advantageous for farms reliant on irrigation,” Ms Redfern said.

“Another welcome development has been global indicative urea prices tracking below long-term averages, given there was a significant jump in urea prices in 2022.”

In the past decade, Australia’s milk pool has vaporised with Coles and Woolworths dollar-a-litre loss leader scheme, initiated in January 2011, hitting the NSW and Queensland markets.

The 2016 clawback by Murray Goulburn and Fonterra was cited by Rabobank analyst Michael Harvey as another contributor towards evaporation of the national pool.

Mr Harvey noted between 2017-18 and 2019-20 financial years, Australian milk production was slashed by six per cent — or 550 million litres in the space of two seasons.