Report 43 – Released on October 22, 2020

AUSTRALIA:

August 2020 milk production in Australia, the second month of the new season, increased 3.2 percent from August 2019, according to Dairy Australia. More detailed production data are in the table which follows.

AUSTRALIA MILK PRODUCTION, MILKFAT and PROTEIN

                            August 2020

                            Million Percent Change   Percentage
     State                  Liters  From 1 Year Ago  Milkfat Protein

     New South Wales          182.7  +2.0            3.99    3.40
     Victoria                 902.0  +3.9            4.08    3.48
     Queensland                53.7  -6.9            4.01    3.36
     South Australia           72.4  +5.3            3.76    3.40
     Western Australia         61.1  +1.6            3.75    3.37
     Tasmania                  65.5  +6.3            4.46    3.55
     Australia (Total)      1,337.4  +3.2            4.06*   3.46**

     *  +4.1 percent from prior year period
     ** +0.3 percent from prior year period

Profitability is believed to be increasing for many dairy producers in south and west Australia. This is attributed to lower feed costs and greater pasture health and availability. Some northern dairy producers report that purchasing fodder rather than irrigating using high priced water has increased milk yields and helped with profit levels.Shifting milk contracts in Gippsland seem to be leading to a cheese plant being closed because the processor who lost milk intake volumes can no longer efficiently operate. It is uncertain which of two plants may close.

NEW ZEALAND:

A large New Zealand dairy cooperative has increased the prior forecast for farmgate milk prices, 5.90 – 6.90 New Zealand dollars per kg of milk solids. It was announced last week that the 2021 forecast is now a range of 6.30 – 7.30 New Zealand dollars per kg of milk solids. Cited as enabling the increase was improved demand in China, quick recovery from COVID-19 impacts, and strong demand for WMP. However worrisome factors that could have an adverse impact as the season proceeds are mentioned to be currency exchange rate volatility,increased milk supply from the US and EU, and uncertainty as to future COIVID-19 impactsand possible global economic slowing.

There is some concern that pasture growth has slowed recently. Unusually cold weather over the South Island and to a lesser extent the North Island, combined with heavy rain, slowedgrowth. More normal weather is expected soon, which will bring some relief if it develops.

Lower credit availability for New Zealand dairy producers has become an obstacle to expansion or new entry to farming. A new enterprise is about to proceed with an initial offering to raise money to fund farmland acquisition. The plan is then to lease farmland top roducers limited by credit to acquire farmland.