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.

 

Freshagenda’s milk price outlook delivers a forecast range of Australian average southern farmgate milk price, based on projected fundamentals in our Global Dairy Directions platform.

 

Freshagenda’s milk price outlook delivers a forecast range of Australian average southern farmgate milk price, based on projected fundamentals in our Global Dairy Directions platform.

core skills and expertise in interpreting industry, market and supply conditions have made us highly valued within the sector as specialist food industry consultants.

We have developed the Global Dairy Directions platform – or the GDD – which is forward looking tool that allows dairy companies, brokers, traders and processors to project the outcome of future scenarios in global and local dairy markets based on variable key assumptions.

Built in Microsoft Excel, our Global Dairy Directions platform uses historical data along with a big set of macros, allowing users to run queries, test scenarios and project future possible outcomes in their part of the dairy industry. It spans the globe as it contains data from key dairying regions all over the world and thus can be used as a tool to help navigate strategic planning at management level.

We include trade data from South America, the US, Europe, New Zealand and Australia as well as other emerging regions. We rely on different sources for our data, including Global Trade Tracker which provides us with up-to-date data, so our clients always have the latest available data at their hands.

Food industry consultants with holistic perspectives

Led by food industry consultants and analysts with combined hands-on experience in excess of 45 years in commodity markets and value chain analysis, Freshagenda has a solid commercial understanding of market dynamics affecting food industry sectors and supply chains and delivers complex information in concise, easy-to-understand formats.

Our strength lies in our unique big picture perspective – a “whole of chain” approach. The engagement spans from farm inputs through to detailed retail and consumer insights – including analyses at the category and sector levels such as interpreting performance of market segments and food categories.

Our recent work includes extensive studies of food price determination within the retail market and various analyses of industry profitability and performance, as well as facilitation of industry and enterprise planning.

Freshagenda have a track record of assisting decision makers assign priorities and direct policy based on the relative size of segments and pressure points affecting their value chains, and have delivered a number of consulting services and analysis to industry, government and corporate clients.

Whether you are a producer, trader, buyer, or investor, Freshagenda offers commercially relevant market intelligence that is relevant to you.