Continued supply and price volatility in world dairy markets has done little to stem the growing interest of investors in the prospect of good long-term returns from Australia’s dairy industry, according to Dairy Australia’s Situation and Outlook Report for November released today.
“Major Australian processors have cautioned suppliers not to expect further price rises for the balance of the season and recommended careful on-farm cost management as milk prices are not expected to see an upturn until the second quarter of 2015,” said Norman Repacholi, Commercial Research and Analysis Manager for Dairy Australia.
But despite caution on price, a number of significant investments in the dairy industry have been announced that reflect growing confidence in Australian milk production and the high regard in which Australian product is held internationally.
“If all of these investments come to fruition it could significantly lift the industry’s long-term profitability and transform how the industry operates,” said Mr Repacholi.
“Additionally, the signing of the China Free Trade Agreement should create new opportunities for Australian dairy despite global markets remaining oversupplied and international commodity prices in decline. Aside from increasing competitiveness of Australian dairy exports, the Chinese industry should also benefit from having a greater choice of dairy suppliers,” he said.
“National milk production is 2.8% ahead of last season reaching 2.34 billion litres, while overall weather conditions have varied significantly around the regions, particularly in northern and western states which continue to face low rainfall, our forecast for growth in 2014/15 remains steady at 2% to 9.35-45 billion litres.
“Nationally, while consumer sentiment is tilted towards pessimism, most major dairy categories are showing better retail growth with cheese and dairy spreads moving to higher average prices and consumer spending at cafes and restaurants remaining healthy,” said Mr Repacholi.
The full November Update is available at DairyAustralia
Source: 4-Traders