23 October 2017
Our forecast for the 2017/18 average southern Australia farmgate milk price is a range of $5.70 to $5.90/kgms with an underlying commodity milk value (CMV) which we now see in a range of $5.35 to $5.55/kgms.
The CMV for the 2017/18 season has improved slightly from our June update, mostly due to the recent surge in butterfat prices. However, continued discounting of block cheese at home has eroded value capture, moderating the outlook slightly.
Global butter prices have held up longer than we had forecast in June supporting underlying CMV. However, our analysis sees butter and powder prices retreating as improved supply is available from New Zealand in late 2017 and northern hemisphere suppliers into 2018.
Increased global supplies are projected to weigh on commodity prices as 2018 progresses, and that has dampened the outlook for 2018/19 farmgate prices for southern Australia.
Our current projected farmgate milk price range for the full 2018/19 season has fallen to a range of $5.05 to $5.45/kgms.
The revised outlook is summarised in the attached document or watch us talk about it.
We will update this outlook in the coming months when factors sufficiently alter the outlook.