In its latest Global Dairy Quarterly, Rabobank has lifted its commodity milk price forecast for the 2020/21 season to $6.60kgMS and lowered its milk production forecast to 8.7bn litres. Rabo senior dairy analyst Michael Harvey says production growth will be modest as the season winds down and the national dairy herd rebuilds following several years of drought.

Harvey forecasts healthy farm profitability will continue through 2021 as key dairy farm regions are experiencing favourable seasonal conditions with good feed supplies and an improved water market outlook for irrigators. While rising bought-in feed costs pose a risk to farmer margins, a healthy local winter crop is keeping feed bills in check for now.