A new report from Rabobank suggests that milk production in Australia is recovering and global supply is expected to increase slightly in the coming year. The bank forecasts that positive growth in milk supply will be seen in the world's main dairy export regions over the remainder of 2024 and 2025, according to foreign press reports.

In the 2023-2024 season, Australia's milk production increased by 3.1 per cent year-on-year to a total of 8.4 billion litres, an increase of 249 million litres. However, „Rabobank“ forecasts slower growth in Australian production for the 2024-2025 season.

„RaboResearch“ senior dairy analyst Michael Harvey points out that Australia's milk supply growth has been broad-based, across all states and regions, with the exception of the western state of Victoria, where drought has limited production. There, a lack of rainfall has affected milk production in these regions.

World market

As noted in the report, the world milk market is currently balanced but remains sensitive to fluctuations. Significant changes could occur in the coming years as production increases and markets adjust. Harvey points out that milk production in the world's main export regions has been inconsistent in recent years.

„As of the second half of 2021, total milk production from the „G7“ dairy export regions - the EU, the US, New Zealand, Australia, Brazil, Argentina and Uruguay - has only grown for three quarters,„Rabobank“ expects milk supply in these major exporting regions to increase slightly in the coming year. At the retail level, price deflation is evident in supermarkets across South America, the United States and most of the European Union.

Chinese dairy consumption

In China, the world's largest importer of dairy products, both milk demand and production are expected to decline. In particular, imports of skimmed milk powder could fall by as much as 30%. China's domestic milk production is projected to decline by 0.5% in 2025 compared to the previous year, due to the economic pressure on farms resulting from falling farm gate milk prices.

„ In contrast, milk prices in regions producing drinking milk for the domestic market remained broadly unchanged“, Harvey noted. „Grain prices have fallen, which is good news for dairy producers, and the outlook for current Australian winter grain prices is largely favourable for buyers," he added.

Australia's dairy exports ended the 2023-2024 season on a positive note, with increased milk supply and significant growth in exports of cheese, skimmed milk powder and whey products.