Milk Price Outlook

5 April 2018

Our forecast range for the 2018/19 average southern Australia farmgate milk price has risen slightly to $5.35 to $5.60/kgms with a lift in the underlying commodity milk value (CMV) which we now see in the range of $4.85 to $5.05/kgms.

What has changed to change this outlook from our last update? Expectations for EU milk growth in the critical spring peak period have moderated with the impacts of cold weather and feed shortages. Demand for butter within the EU remains buoyant and low stocks have kept prices high. High butter prices are in turn supported cheese values.

On top of the improved CMV, a changing manufacturer and retailer dynamic has the potential to improve value capture above commodity returns.

While this forecast is based on market fundamentals, heightened competition for milk at the farmgate post the Murray Goulburn sale and with additional buyers in regional markets is likely to keep farmgate prices elevated.

This outlook is summarised in the attached document.