Australian milk production will decline to 8.6mt in 2025 following a 2.3% increase during 2024 according to the latest USDA GAIN report. The expected contraction this year is due to dry weather conditions in Southwest Victoria and South Australia, which will only partially be offset with lower feed grain costs and continuing strong farmgate milk prices.

Australian processors continue to prioritise cheese. This year, cheese manufacturing is projected to utilize 37% of the national milk pool and 53% of the manufacturing milk pool. Cheese production is forecast to decline 1.5% to 395,000t due to lower milk deliveries.