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Dairy Australia - Market News


20 December 2012

Dairy Australia - Fortnightly Update 20 December 2012Dairy Australia - Fortnightly Update 20 December 2012

EU milk production continues to lag 2011, NZ growth also slowing, growth returns for Australian production.
Dairy Australia - Market News

Global Developments

Latest indications from the EU confirm the hit that milk production has taken in the region over the northern hemisphere summer, with October estimates suggesting a drop of 1% relative to October 2011. Shortages of quality fodder due to wet weather have combined with high grain prices to squeeze production in the northwest – with the biggest decline of nearly 7% in the UK. France saw a 4% drop, while Germany and Denmark were close to par with 2011 and eastern European countries saw growth slow markedly from the breakneck pace of early 2012. While speculation has begun surrounding several countries that may exceed their production quotas and incur superlevy fines, growth for the EU overall is expected to slow further as 2012 draws to a close.

Growth in New Zealand milk production is also slowing, with October output less than 4% above October 2011 – compared to 5% growth in September and 14% in August. In season-to-date terms, production is up 6% on last year for the June-May NZ production season. New Zealand’s Ministry of Primary Industries sees this growth continuing to slow, reaffirming its forecast of zero growth for the full 2012/13 season in its most recent semi-annual Situation and Outlook report. While cow numbers are higher, the Ministry expects lower per cow yields than 2011/12 as climatic conditions return to average.

The final event for 2012 (#82) on the Global DairyTrade (GDT) auction platform saw prices remain broadly steady, with the Trade-Weighted Index (TWI) increasing 1.1% as average pricing for many products changed by less than 1% relative to a fortnight ago. SMP matched the TWI’s move, increasing 1.1% to US$3,419/t while WMP eased 0.6% (averaging US$3,147/t). Rennet casein was the biggest mover (up 6.9% to US$8,477/t) while GDT cheddar broke the US$3,500/t mark, up by 4.9%. AMF eased slightly (down 0.1% to US$3,180/t) after a series of recent gains. For more information, visit www.globaldairytrade.info.

Export Index

The Australian Front

Preliminary data suggests Australian milk production for November was nearly 1% higher than November 2011, indicating a resumption of growth following a slight contraction in October. Year to date, milk production to November (totalling close to 4.5 billion litres) remains around 1% higher than for the same period last year. The picture remains mixed at the state and regional level – northern Victoria continues to outperform (up 8% YTD), while Queensland (down 4%) and Gippsland (down nearly 3%) have seen milk intakes drop the most.

Burra Foods announced its second step up for the 2012/13 season: the $0.10/kg butterfat and $0.25/kg protein increase, equivalent to 17c/kg of milk solids, takes the company’s ‘weighted average available price’ to $4.90/kg milk solids. The increase has been attributed to strong first half sales performance and ongoing demand growth for high quality ingredients in key export markets – notably Japan and the Middle East.

The Tasmanian government has announced it will provide $400,000 in funding to support training and workforce development for the state’s dairy industry as part of the ‘Filling the Factories’ project, an initiative supported by local industry in conjunction with Dairy Tas and Dairy Australia. The Tasmanian industry is aiming to supply an additional 350 megalitres of milk supply and create 550 local on-farm jobs.

Herd improvement organisations Genetics Australia and HICO have signed a formal agreement to examine a merger between the two organisations, although no timeline has yet been set. The potential merger is touted as a way to reduce costs and enable increased investment in technologies.

 

Australian Export Index (Base = 100 at Jan 2000)
 This WeekLast Month3 Months ago
Index (USD) 226.8 226.8 223.1
Index (AUD) 141.0 143.5 139.1
AUD/USD 1.0541 1.0357 1.0512

December 2012

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