Q3 2022 Milk Value Portal Dairy Market Insights now available

The third-quarter Dairy Market Insights report 2022 (September) is now available on the Milk Value Portal (MVP), focussing on the macroeconomic and geopolitical variables impacting the dairy market in the short to medium term.

Key insights include:

  • Internationally: The outlook for global dairy markets is becoming increasingly complex. This is largely due to wider issues in the world economy and ongoing conflict in Europe, along with escalating tensions between Russia and Ukraine increasing uncertainty for European energy markets. At the same time, currency markets are responding to the efforts of central banks to control inflation.
  • Supply-side fundamentals have changed somewhat with gradually improving milk availability in the EU, and the US now firmly back in growth mode, whilst Oceania milk collections are in steep decline due to cold and wet weather.
  • Spending on dairy products is slowing in developed markets due to increasing pressure on household incomes, while in developing markets rising food inflation and high dairy ingredient prices have also impacted demand.
  • Locally: The Australian domestic market is being affected by similar issues. While some measures indicate discretionary spending is not being too adversely impacted, there is evidence of trading down in retail data, as supermarket and processor margins under increasing pressure.
  • Milk output in the major southern manufacturing regions remains significantly lower than the prior year, despite favorable pasture conditions. A 4-5% decline in raw milk production is expected in the coming months, and a full season decline for 2022-23.
  • The commodity value of milk (or CMV) in Australia has continued to decline as commodity prices have fallen over the past quarter, although a weaker local currency is offering some support for exporter returns. The spot commodity milk value stood at $8.64kgMS at the end of September, down 8% from the June update and a weighted average announced southern region farmgate milk price of $9.60kgMS.
  • Given the gap between where CMV is tracking and announced milk prices, passing through price increases in the domestic market remains critical.

View or download the Q3 2022 Milk Value Portal Dairy Market Insights report here.

Register to receive regular insights from the MVP at: https://milkvalue.com.au/register/