7 June 2017
Our forecast for the 2017/18 average southern Australia farmgate milk price is a range of $5.80 to $6.00/kgms with an underlying commodity milk value (CMV) which we now see in a range of $5.30 to $5.50/kgms.
This is a 20c/kgms better outlook for the CMV for the 2017/18 season from our update in early May, mostly due to the recent surge in butterfat prices.
Weaker milk supply in the EU due to a cold spring has created a more severe shortage of butter, driving up prices. Demand for butterfat has steadily built over time, broadening the market base. Our analysis sees prices retreating as improved supply is available later in the 2017 and early 2018, but the higher prices affect the CMV due to the important of butter in Australia’s product mix.
We will update this outlook in the coming months when factors sufficiently alter the outlook.