No opening prices revealed as dairy deadline looms for processors

Less than a week to the deadline not a single processor has revealed its opening offers, in stark contrast to the bidding war of recent years.

The time frame for processors to confirm their prices has been pushed forward 48 hours as the usual June 1 deadline falls on a Saturday this year. Picture: Zoe Phillips

More farmers will leave the dairy industry if processors follow through with their “quiet campaign” to cut farmgate prices, the United Dairyfarmers of Victoria president says.

Bernie Free says factories need to maintain pricing at current levels into the new financial year, as processors prepare for the June 3 deadline.

As of Tuesday morning – less than a week to the deadline – not a single processor had revealed its opening offers, in stark contrast to the bidding war of recent years.

“There’s been a quiet, or not-so-quiet, campaign from processors for months now about cutting prices,” the UDV president said.

“They’ve pointed to the milk pool rising slightly as a reason to cut, conveniently forgetting that it’s still low compared to the long term average.

“More farmers will leave dairy and go to beef. It’s less public than it used to be, there’s not the big sales like there once was. There’s just farm after farm that has beef cattle on it that was once dairy.”

Stipulated by the federal government’s dairy code of conduct, the time frame for processors to confirm their prices has been pushed forward 48 hours as the usual June 1 deadline falls on a Saturday this year.

RaboResearch dairy analyst Michael Harvey believes opening prices will settle at an average of $8.00 to $8.20 per kilo milk solids on the back of tepid economic conditions both at home and abroad.

“As with any average, some processors will offer a little more, some will offer a little less,” Mr Harvey said.

“Reflecting where we have been over the past 12 months, the commodity market has been on significant downturn. We’ve seen some recovery so far, but we’re looking out at the next six months (of the 2024-25 financial year) and we’re quite cautious around further upsides, in fact, you can’t rule out further downsides based on what the market is indicating.”

Australia’s milk pool recovery in recent months has also played a part in softened expectations for new season prices.

Last week, Dairy Australia’s situation and outlook report forecast the 2023-24 season would clock in at 8.35 billion litres at the end of the financial year on June 30.

“One of the factors behind the strong prices in the last cycle was that shrinking milk pool,” Mr Harvey said.

“Now that the milk pool is recovering, you could say recovering ahead of schedule, that’s changed that dynamic.”