Australia’s milk production on the rise amid global dairy market adjustments

AUSTRALIA – Australia’s milk production continues its upward trajectory, contributing to a modest global growth in dairy supply, according to Rabobank’s newly-released Global Dairy Quarterly report.

The Q3 report, titled Market Narratives are Shifting, anticipates positive but modest growth in milk supply from the world’s major dairy-exporting regions for the remainder of 2024 and into 2025.

The report highlights that Australia experienced a 3.1% increase in milk production during the 2023/24 season, which concluded in June, reaching 8.4 billion litres.

This marks a significant rise of 249 million litres compared to the previous year. However, Rabobank predicts a slower growth rate for Australian milk production in the 2024/25 season, forecasting an increase of just 1.5%.

Michael Harvey, RaboResearch’s senior dairy analyst, noted that the growth in Australia’s milk supply has been widespread, with most states and regions reporting increases.

New South Wales led the way with a notable 5.3% rise in milk production during the 2023/24 season. However, not all regions fared equally well.

Production in western Victoria was constrained by dry conditions, and similar challenges were faced in South Australia, both of which are significant milk production regions.

“Seasonal conditions remain mixed across the key dairying regions,” Harvey said. “There have been severe rainfall deficiencies in 2024 for western Victoria and South Australia, but conditions elsewhere have been mostly favorable.”

Globally, the dairy market remains balanced yet sensitive to changes. Rabobank’s report suggests that the next year could see significant shifts as milk production increases and markets adjust.

Harvey noted that milk production from the main global export regions has been inconsistent over recent years, with the combined output from the Big-7 dairy exporters—the EU, US, New Zealand, Australia, Brazil, Argentina, and Uruguay—only increasing in three quarters since the second half of 2021.

Despite this, high dairy prices in early 2024, coupled with lower feed costs, have improved farmer margins, encouraging increased production.

Rabobank projects a modest 0.14% increase in milk supply from these major exporting regions in 2024 compared to the previous year.

However, the outlook for 2025 is more optimistic, with initial forecasts suggesting a 0.65% year-on-year production increase from the Big-7, potentially pushing global milk supply above the five-year average.

As the global dairy market adjusts to these changes, Australia’s role as a key milk producer remains crucial, with continued growth expected, albeit at a slower pace.

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