The 2023-24 Season 

Farmgate milk prices announced for the 2023-24 season (set in June 2023) for southern Australian milk producers were strongly influenced by domestic market requirements for fresh milk, natural cheese, fresh cream and dairy foods. These prices were only slightly lower than milk prices from the 2022-23 season, supported by retail and wholesale prices in the domestic market.

Other fresh milk processors and dairy product manufacturers were compelled to match these raw milk prices as far as possible to prevent erosion of their supplier base given the expected ongoing declines in milk production.

Update: 28-Aug-23

top ⇑

Opening prices were bid higher by strong competition for milk, which was extended through June as milk producers took advantage of the Code’s cooling-off period to await higher offers.

Domestic wholesale product prices for cheese and butterfat have been significantly higher than Oceania spot export prices (based on New Zealand exports) since the 2nd quarter of 2022 due to the downward pressures on Australian milk supplies and the butterfat deficit in the Australian market.

2024 is season to date: 28-Aug-23

top ⇑

The ongoing weak demand for ingredients from China and Southeast Asia has sharply weakened global prices in recent months. China’s economy and hence its dairy demand have not revived as quickly as was widely expected following the end of stringent lockdowns in early 2023, causing a build-up of inventories. The weakness in China has seriously affected confidence in Southeast Asian dairy markets.

The commodity milk value based on NZ spot export prices has however slumped below A$6.00/kgms, currently compared to Southern Australian average farmgate prices of $9.40/kgms for the 2023-24 season.


While Southern Australian milk prices in the 2023-24 season are closer to milk prices being paid in the EU and US, Fonterra’s 2023-24 expected NZ milk price has been revised down to a mid-point equivalent to A$6.34/kgms (adjusting for exchange rates and crude protein), 33% below the milk price paid by Australia’s dairy product manufacturers.

The high cost of milk to dairy product manufacturers with exposure to global markets for SMP and cheese is unsustainable without a major reversal in market conditions, which seems unlikely based on the current outlook. With an expected increase in milk production in southern regions through the second half of 2023, the available returns on spring milk from commodity products will, on current indications, be significantly weaker than the cost of milk to processors.

*2024 is based on latest estimates

top ⇑

With the significant cut in WMP demand from China that was apparent during the harsh lockdowns in the 2nd half of 2022, New Zealand’s dairy product manufacturers were forced to shift large volumes of milk into other product streams including SMP and butter, worsening global oversupply of these commodities.

The ongoing weakness in China’s demand for WMP is expected to sustain such unprecedented changes in product mix well into the current NZ season.

© 2020 Milk Value Portal

Developed by FreshAgenda