Global Dairy Trade: Stronger international market raises opening price expectations

Expectations of average opening prices above $9 per kilo milk solids are growing following a strong GDT session. See the details.

Fast-rising fodder costs and buoyant international markets should push the opening milk price above $9 per kilogram of milk solids, dairy farmers claim.

One of the biggest jumps in the Global Dairy Trade index was notched up last week, with the latest trading session posting a gain of 4.6 per cent to reach $US4516 ($A6958) a tonne.

The whole milk powder category rose even further with a 6.2 per cent gain to $US4374 ($A6739) a tonne while the cheddar category clocked up one of the biggest increases, up 12 per cent to an average of $US5519 ($A8503) a tonne.

South Gippsland dairy farmer Bernhard Lubitz from Leongatha said the GDT has largely traded in positive territory throughout this financial year, meaning an opening price approaching $10 per kilo milk solids should be in contention.

He noted the GDT had risen more than 25 per cent over the course of the 2024-25 financial year, with Australian processor step ups rising only 2-3 per cent during the same time frame.

“This isn’t just about fodder prices being high – with the drought the way it is, it’s hard to get quality feed in the first place,” Mr Lubitz said.

“The GDT has been very strong this financial year and the rest of the world has kept pace with it – Australia is an outlier. Take for instance Ireland – they have a higher milk price than us with equivalent wages and electricity costs.

Under the federal government mandatory dairy code of conduct, all processors nationwide will need to report opening prices for the 2025-26 season by June 2.

In previous seasons, some processors have released an indicative opening price during May but none chose to do so in May 2024 and so far this month, the trend of waiting to deadline day has been repeated.

Australian Dairy Farmers president Ben Bennett said the latest GDT headline figure had “gone up like a rocket” giving cause for optimism that opening prices will be above $9 per kilo milk solids.

“There was a lot of talk about the GDT a few years ago from processors when it was convenient. Now that the GDT is strong, they’re not acknowledging it,” Mr Bennett said.

Rabobank dairy analyst Michael Harvey said average opening prices above $9 per kilo milk solids were increasingly likely next month, a 10 to 15 per cent increase on the initial offerings from processors in June 2024.

He told the Dairy Farmers of Victoria annual conference that stronger international demand coupled with a weaker Australian dollar had helped lift expectations of higher prices.