Milk Price Outlook

6 June 2018

Our forecast range for the 2018/19 average southern Australia farmgate milk price has improved to $6.10 to $6.50kgMS with a significant lift in the underlying commodity milk value (CMV) since our April update, which we now see in the range of $5.60 to $6.00kgMS.

What has happened to change this outlook from our last update? Much lower than expected EU milk growth through the spring peak period and sustained demand has tightened the market significantly – particularly for butterfat. Looking ahead, forecasts for a hot and dry European summer are likely to curb milk growth and encourage cream demand – maintaining market tension.

While this forecast is based on our current view of future market fundamentals, strong competition for milk supply between dairy companies will also have a major effect on the final outcome for 2018/19 southern farmgate milk prices.

This outlook is summarised, and detailed assumptions are provided in the attached document. The outlook will be updated when forecast market conditions change.

You can find more information on how the Commodity Milk Value is calculated here.