Global glut could sour milk outlook
Dairy farmers are urging Australian processors to think about the bigger picture as global supplies of milk rise. A number of analysts, including Rabobank, have reported on the lift in global milk supplies, peaking last quarter, and expect to almost match this for the final three months of the year.
Combined production fr om the biggest milk producers across the world is expected to rise 2.2 per cent. Dairy Farmers Victoria president Mark Billing said he would be surprised if local milk prices stepped down this season even with the lift in world supplies.
Mr Billing said all parts of the global supply chain were under pressure with an oversupply “as we speak”. But Mr Billing said processors needed to take a longer term view if they wanted to maintain or even grow the national milk pool. “We know that processors are exposed to global prices and look to these to price set here locally,” Mr Billing said.
“Production from the United States has lifted and that has come on to the export market.” And while current milk prices for this season look safe, Mr Billing said there was less certainty about next season given the worldwide trend of lower rates.
“We would hope that processors will think about the investment they have in steel (tanks), plants and people and recognised that it will all come
to nothing if they don’t have the milk to utilise it,” Mr Billing said.
“We’ve seen some companies close down inefficient plants already yet they will need milk through their other plants to get a return on that investment.” RaboResearch senior dairy analyst Michael Harvey described the growth in global milk production since June as “stunning”.
“The European Union and the United Kingdom posted their strongest growth since 2017 for the month of October, while surging October milk flows saw the US post its fifth consecutive month wh ere growth rates have been over 3 per cent,” Mr Harvey said.
New Zealand had also set milk solid production records from May to September, as well as South America, which had boosted production this
year. “The combined output from the big seven global dairy producers – the EU, the US, New Zealand, Australia, Brazil, Argentina and Uruguay – is forecast to finish 2025 up 2.2 per cent year-on-year,” Mr Harvey said.
“This wave of milk has softened dairy markets through the third quarter of this year, with sharp price falls recorded in the fourth quarter.”
Mr Billing said all parts of the global supply chain were under pressure with an oversupply “as we speak”. But Mr Billing said processors needed to take a longer term view if they wanted to maintain or even grow the national milk pool. “We know that processors are exposed to global prices and look to these to price set here locally,” Mr Billing said.
“Production from the United States has lifted and that has come on to the export market.” And while current milk prices for this season look safe, Mr Billing said there was less certainty about next season given the worldwide trend of lower rates.
to nothing if they don’t have the milk to utilise it,” Mr Billing said.
“We’ve seen some companies close down inefficient plants already yet they will need milk through their other plants to get a return on that investment.” RaboResearch senior dairy analyst Michael Harvey described the growth in global milk production since June as “stunning”.
“The European Union and the United Kingdom posted their strongest growth since 2017 for the month of October, while surging October milk flows saw the US post its fifth consecutive month wh ere growth rates have been over 3 per cent,” Mr Harvey said.
New Zealand had also set milk solid production records from May to September, as well as South America, which had boosted production this
year. “The combined output from the big seven global dairy producers – the EU, the US, New Zealand, Australia, Brazil, Argentina and Uruguay – is forecast to finish 2025 up 2.2 per cent year-on-year,” Mr Harvey said.
“This wave of milk has softened dairy markets through the third quarter of this year, with sharp price falls recorded in the fourth quarter.”
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