Australian milk production continues to grow - with 2.2% lift in December

The latest figures from Dairy Australia reveal milk production grew 2.2 per cent in December compared with the same month the previous year.

Year-to-date production was up 2.1pc.

Australia leads major global dairy exporting regions - with New Zealand the only other region to record growth in December.

New Zealand milk production was up 0.9pc on a litres basis (up 2.6pc on milk solids basis) in December compared with the same period the previous year.

The increase in NZ was due to favourable weather conditions supporting pasture growth, Fonterra's said in its January Global Dairy Update.

Production in the United States fell 0.3pc in December, according to figures from the US Department of Agriculture.

This was mainly due to reduced numbers of cows.

The latest data from the European Union reveals milk production decreased 2.3pc in November - driven by big falls in Ireland, France and the Netherlands.

EU milk production for the 12 months to November was up 0.1pc on the previous comparable period.

NSW leads the rebound in Australian milk production - with December production up 8.8pc and year-to-date production up 5.6pc.

Northern Victorian production also jumped in December - up 6.6pc on the same time last year.

In both regions, production in 2022 was affected by severe flooding.

Western Victoria is the only dairy region in Australia where milk production is not growing.

December production there was down 1.6pc and year-to-date production still lags behind last year - down 1pc.

But the growth in milk production in Australia is not flowing through to exports.

The latest report from Dairy Australia reveals exports decreased 10.5pc in volume terms and 10.3pc in value terms financial year-to-date to November compared with the previous year.

There were big declines in export volumes of butter oil, whole milk powder, milk and butter

Whey products, other dairy products, skim milk powder, cheddar cheese and other cheese reported increases in volumes.

But the value of dairy exports declined almost across the board with only other cheese and other dairy products (casein, lactose, condensed milk, ice cream, yogurt, buttermilk powder and milk protein concentrates) recording an increase in value.

This reflects lower global prices for milk.

The Food and Agricultural Organisation's Dairy Price Index for January was 17.8pc lower than the same time last year.

But the FAO said in January, international price quotations for butter and whole milk powder increased largely due to higher demand from Asian buyers, nearly offsetting declines in those for skim milk powder and cheese.

Global dairy markets have been improving.

Rabobank says global dairy commodity prices were expected to "have bottomed" and were likely to improve in 2024.

"Locally in Australia, while there will likely be some downward price pressure on some parts of the southern dairy region for new season milk from July 1, domestic markets will provide ongoing support for farmgate prices, and the margin outlook for dairy farmers remains positive," the bank's general manager Australia and New Zealand Stefan Vogel said.