Global Dairy Trade: Uptick just in time for Australian farmgate

International dairy figures have been weighing on farmers’ minds for months. Do they finally have good news ahead of the domestic season opener?

Plummeting international dairy prices have stabilised, six weeks out from a crucial financial deadline for Australian farmers.

The headline figure for the Global Dairy Trade index rose 3.2 per cent overnight, 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.

Westpac agricultural economist Nathan Penny said medium-term signs for international dairy prices were positive.

“Over the year, we expect that rebounding Chinese dairy demand and very subdued global supply will lead global dairy prices higher,” he said.

“But for now, some key buyers are well supplied and we anticipate that as they work through these stocks prices will remain soft.”

Overnight was only the second positive trading session out of nine GDT events this calendar year, a factor weighing heavily on Australia’s farmgate.

All Australian processors have to list their opening prices on their websites by June 1, as stipulated by the federal government's dairy code of conduct.

This time last year, processors were offering first, even second offers in an unprecedented bidding war for milk supply.

But this year’s lead-up to the June 1 deadline has been decidedly muted.

GDT results have been soft throughout 2023. Picture: Zoe Phillips

Australian Dairy Farmers president Rick Gladigau said the GDT was just one indicator for processors when assessing opening prices.

He said Australia’s shrinking milk pool should be front-of-mind for processors when determining opening offers.

“We have a smaller milk pool than a year ago. It’s the smallest it has been in some time,” Mr Gladigau said.

“Farmers want a fair opening price to keep them in dairy.”

Fonterra chief executive Miles Hurrell welcomed the uptick but urged caution about reading into the result.

“It is a good news story. The Middle East was a good supporter through its skim milk,” Mr Hurrell told Newstalk ZB.

“Let’s not get ahead of ourselves about next season. It’s only the second increase we’ve had this calendar year (in GDT trading sessions).

“China was relatively quiet and we need them to come back with some consistency.”