Australian Dairy Farmgate Prices Remain Lower Despite International Market Trends

International Price Trends and Local Currency Fluctuations

International dairy prices have surged by 17% since processors in Australia were required to disclose their opening prices, a significant factor considering the concurrent decline of the Australian dollar. This combination reduces the competitive advantage of American and New Zealand dairy imports, according to industry experts.

Impact on Australian Farmgate Prices

James Maxwell, Bendigo Bank's senior insights manager, notes a trend towards an 18-month high on the Global Dairy Trade (GDT) index, with improvements in both whole milk and skim milk categories. Despite this, the average southern farmgate price in Australia rose modestly from $8.10 to $8.20 per kilo of milk solids, still trailing by 14% compared to the previous season.

Fonterra's Response and Future Expectations

Across the Tasman Sea, Fonterra has responded to global price increases by raising its forecast payout to New Zealand producers by 25%. With Bega and Saputo following suit in Australia, all eyes are on the upcoming price adjustments anticipated from other processors.

Global Supply Tightening

Maxum Foods' general manager Edwin Lloyd anticipates a narrowing gap between Australian and New Zealand farmgate prices by winter, as global dairy supply tightens due to factors such as the bird flu outbreak in the U.S. and shifts in beef and dairy production dynamics.