According to Rabobank’s Australian Dairy 2022/23 Seasonal Outlook, dairy farmers are looking at another profitable season with record high milk prices and favourable seasonal conditions. Rabobank is forecasting a record indicative milk price of $8.40kgMS, 15% higher than benchmark prices for the 2021/22 season. The record forecast is a result of higher prices in global dairy commodity markets according to Rabobank senior dairy analyst and report author Michael Harvey. Harvey noted that Australian dairy farm businesses could ensure strong cashflow positions by taking advantage of the strong local guaranteed milk price as processors compete for Australian milk supply. Rabobank expects milk production to finish 3.5% behind the season prior at 8.55bn litres in 2021/22 but tips a return to growth in 2022/23 forecasting production at 8.64bn litres, up 0.9% YOY.
Despite the positive outlook for next season, the report warns of increasing costs and ‘turbulence’ from the continued impacts of war and COVID lockdowns on supply chains globally. Milk growth across the Big 7 dairy exporters remains negative with all recording lower milk production on the year prior, due to a combination of rising input costs, supply chain disruptions and weather-related impacts. Harvey said a price correction in global markets is expected as milk output in export regions returns to year on year growth in the second half of 2022, Chinese bulk import volumes drop and broader demand rationing from consumers in emerging markets.