2016 ended with a fall in milk production for Australia and New Zealand, the two main countries of Oceania; Australia lost 10.29% in the July-October period of 2016 compared to the same period the previous year and New Zealand reported a decrease of 3% over a longer period – from June to November (CLAL data). This fall in production is due to several reasons in spite of the weather conditions which were favourable. The hot and dry climate in the north of Australia improved the quality and production of hay, which in turn allowed Aussie dairy farmers to limit their need to purchase additional feed for dairy cows.
In New Zealand in November milk production was down by 4.53% compared to the same period in 2015 due to rainy weather, especially on South Island, which has had negative effects on milk production. The positive implications regard price: the last auctions were good enough to support raw milk prices recommended by the main processing companies.
Dairy product performance in Oceania
With regard to dairy products, according to CLAL data, prices of butter are rising slightly with a reduced milk production which continues to limit production.
As far as Cheddar is concerned, prices are rising slightly. During the holiday season demand fell, however the few buyers in the market were determined to buy.
As regards milk powders, skimmed milk prices have risen slightly partly due to the decision of some processing companies to use milk to produce whole milk powder instead of skimmed milk powder; potential buyers appear very cautious also due to uncertainty caused by the EU intervention stores, and manufacturers are trying not to exceed the supply needed to meet current demands.
On the other hand, whole milk powder prices are falling, perhaps due to an increase in supply as previously mentioned.
In conclusion, raw milk prices expected in New Zealand should increase farmers’ confidence to be able to pay debts incurred recently in a period of low revenues.