Q3 2023 Milk Value Portal Dairy Market Insights now available

The Q3 2023 Dairy Market Insights report (September 2023) is now available on the Milk Value Portal (MVP), examining in detail the macroeconomic and geopolitical variables impacting the dairy market in the short to medium term. Key points to note include:

International:

* Whilst there is reason to be cautiously optimistic that the bottom of this dairy commodity cycle is behind us, there is a long way to go to get back to the high prices witnessed this time last year.

* Demand remains subdued in both the domestic and export markets, reflecting the impact of continued inflation and higher interest rates on household budgets and spending.

* Supply has been the major driver of tightening markets with slowing growth in the EU, US and erratic early Spring conditions in New Zealand.

Locally:

* High prevailing raw milk input prices and reduced commodity returns will impact processor finances differently depending on their exposures to commodity markets.

* The buffer between domestic wholesale prices and international benchmarks has been eroded in recent months as Oceania dairy commodity prices have fallen sharply.

* The official declaration of a local El Nino weather event followed a record breaking dry and warm September and ironically preceded localised flooding particularly in the Gippsland region in Victoria. After a promising start to the new season this will likely curtail spring milk production.

* The monthly CPI indicator rose 5.3% in the 12 months to August with food and non-alcoholic beverages price rises moderated for the period to 4.4%. Within the food and non-alcoholic beverage category dairy continued to be one of the main contributors at 10.1%. Cheese prices fell between July and August while other dairy products recorded small increases.

* Whilst there is evidence that inflation has peaked – and interest rates on hold for the time being – consumer confidence has not yet recovered with shoppers still seeking out private label products on the supermarket shelves. Retailers continue to address shopper concerns by focusing on “value”.

To access the latest Dairy Market Insights report, please visit the Milk Value Portal by clicking here.