Pressure and volatility appear to be consistent themes in today's dairy market, as uncertainty drives farm business plans and purchasing activity.
Costs have been building not only on the farm level but across the supply chain, with global events carrying some influence.
Farmgate milk prices have been rising both here at home and globally, in an effort to secure scarce milk.
However, this is yet to elicit a production response in key exporting regions and demand continues to soak up what is available.
Strong rainfall over spring and summer has supported water availability and feed production, whilst keeping fodder and temporary water prices below long-term averages.
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Demand for these inputs has been subdued, however warm conditions in recent months have seen some regions begin to dry out and the need for feed rise in response.
Grain and fertiliser prices continue to be supported by limited global supply and strong export demand.
Recent peace talks between Russia and Ukraine saw grain values shift back and forth in the hope of a supply boost.
However, uncertainty surrounding Ukraine's ability to produce and export grain continues to weigh on the market.
A significant portion of the world's fertiliser supply remains locked up by export quotas and bans and many buyers are moving urgently to secure their product needs.
As such, fertiliser prices have been surging globally.
Not to be left behind, costs associated with fuel, chemicals, energy and labour have also continued to move higher.
Whilst strong farmgate milk prices help to mitigate these margin impacts, rising input costs are likely to continue influencing production plans.
Labour shortages, farm exits and ongoing culling are again weighing on the national milk pool.
Milk flows have continued to slow over the first few months of 2022; hot and humid weather limited pasture growth in addition to devastating floods in several regions affecting the quality of feed grown and stored.
Across the ditch, weather challenges have hindered milk production, with New Zealand's milk flows slowing.
Despite rising farmgate milk prices in Europe and the US, supply chain challenges, high input costs and smaller national herds continue to weigh on production.
Whilst there has been some growth in cow numbers, it is likely that input costs pressures are likely to remain (at least in the short term) limiting any significant expansion.
Global demand for dairy has been robust throughout the pandemic, despite related disruptions.
Global dairy exports continue to rise, with strong demand from most corners of the world.
However, China's commitment to a COVID-19 eradication approach and subsequent lockdowns more recently have seen demand from this market waver.
Strong commodity values have acted as something of a deterrent for buyers from the MENA region and other price sensitive markets.
However, the revival of the tourism industry in south-east Asia has boosted purchasing interest from buyers in this region and overall demand continues to be supported.
As the global supply and demand fundamentals continue to tip the scale, dairy commodity values have pushed higher, sitting above long-term averages.
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With skim milk powder (SMP) and milkfat products offering attractive returns, there has been a focus from manufacturers to tap into these streams, at the expense of whole milk powder (WMP) production.
That being said, many Australian manufacturers are unable to benefit from such returns, being mostly sold out of product this season.
Shipping congestion, a lack of containers, late departures and staffing shortages continue to be constant pain points, with higher shipping rates adding to commodity values.
It's a consistent and widespread story.
Mounting input costs are likely to remain a key pressure on milk production in many key exporting regions. Whilst there are signs of shifting dynamics, overall demand remains robust and continues to outpace supply.
Continued market strength is a welcome sign as new season prices begin to be formulated, already demonstrated by early opening milk price announcements, helping mitigate some of the on-farm pressures that are likely to persist.
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