Report 31 – Released on July 30, 2020

AUSTRALIA:

Australian sources report that current projected milk pay prices provide a solid platform for seasonal dairy profitability. An uncertainty being watched is rain. During June most of Australia recorded below average rainfall. Producers in some regions are already voicing concern about current conditions being too dry to sustain the summer and maintain profitability. Some July to September meteorological projections are said to point toward less favorable rain, due to conditions in the Indian Ocean. That could lead to higher production costs. So as is often the case, early season uncertainty is particularly stressful.

NEW ZEALAND:

There has been some concern as to the outlook for the developing New Zealand dairy season ahead. Weather so far has been viewed as favorable to pasture growth and dairy production.Yet some observers are voicing uncertainty about the potential for not so good weather and how that would impact production and pricing. Another topic of discussion is whether macroeconomic effects of COVID-19 may lead to recessionary factors which could lead to weaker consumer demand. Some regional agricultural bankers are watching this closely. The uncertainty gets more complicated to assess in New Zealand because so much dairy production there is destined for export. Projecting the future in multiple other markets is more challenging than where a substantial amount of dairy production is consumed domestically close to home. Some New Zealanders question whether recent dairy product price volatility is related to sellers and buyers responding to these uncertainties as they see the future. So far though, early season production has been viewed favorably.