What’s driving farmgate milk pricing and influencing the market?

The Australian Dairy Products Federation (ADPF) has recently released the Q4 Dairy Market Insights report (December 2021), now available on the Milk Value Portal.

ADPF Executive Director Janine Waller said this report, produced by Freshagenda, provides local and global market insights into what to expect in the short to medium term with industry facing tightening milk supplies, the rapid spread of the Omicron variant of COVID, and the continued challenge of increased input costs.

Key insights from the report include:

Local market insights:

• Current data shows the Commodity Milk Value (CMV), a useful indicator of how the global market may affect product prices in the coming month, has jumped above A$8.00/kgMS in recent weeks.
• Looking further ahead to 2022/23, a midpoint of A$7.50/kgMS for the CMV is currently forecast.
• The ability to pass on the benefits of a buoyant spot commodity markets to milk suppliers will depend on the exposures of individual manufacturers, the operational impacts of the Omicron wave in terms of rising input costs and increased uncertainty affecting marketing channels, ­­weighed against a highly competitive landscape of raw milk supply.

Global insights:

• The global market outlook remains under the influence of tight milk supplies which will remain supportive of the commodity values until pressure changes, which at earliest will be Q2-2022, when the strength of the northern hemisphere flush is known.
• New Zealand has had a weaker than usual spring, and poor margins in the US are driving falling cow numbers and per-cow yields.
• China continues to dominate international trade, holding together the global market balance. However, China’s demand through the peak shipping period into Q1-2022 remains critical, the supply-side holds the key to the next six to nine months.

To access the latest Dairy Market Insights report, visit: https://milkvalue.com.au/wp-content/uploads/2022/01/Milk-Market-Outlook-Dec-2021-final.pdf.

To learn more about the Milk Value Portal, click here.