Report 19 – Released on May 13, 2021

AUSTRALIA:

January – March 2021 bulk and packaged milk exports from Australia 61,000 MT, increased24.8 percent from January – March 2020, according to CLAL data made available to USDA. Themain export destinations January – March 2021, quantities, and percent change from January– March 2020, were China, 29,030 MT, +80.84 percent; Singapore, 11,124 MT, -1.75 percent;and Malaysia, 5,007 MT, -13.80 percent.

Australian current milk production is near the seasonal low, as the end of the season onJune 30 moves closer. Australian law requires dairy processors to announce the new seasonopening price by June 1 each year. A major Australian dairy cooperative just announced anopening price of 6.55 AUD/kg milk solids. That price is 15 cents/kg milk solids higher thanthe opening price last season. A competing milk processor had already announced an openingprice range of 6.40-6.90 AUD/kg milk solids.

A leading Australian dairy research, development and marketing body has been funded for manyyears by levies on dairy processors and government funding. Increasingly dairy producershave considered the absence of funding from dairy processors to be a bugbear. Now some ofthe largest dairy processors operating in Australia have agreed to work out details for alsocontributing to funding the organization. While details have yet to be finalized, leaders ofsome dairy producer organizations say that member producers are pleased to gain somefinancial contribution from dairy processors.

NEW ZEALAND:

New Zealand milk production is near the seasonal low, as the end of the season on May 31moves closer. New Zealand dairy sources note that the dairy herd peaked in 2016 and hasdropped since then. The largest dairy areas in terms of cow numbers are Waikato on the upperNorth island; Canterbury on the central-eastern South Island; Southland on the southwesternportion of the South Island; and Taranaki on the west of the North Island. With the NewZealand winter moving closer, upward dairy commodity price pressure is expected until milkproduction increases begin to flow into processing plants.

The South Island remains quite dry. This is cited as a reason for disappointing officialMarch milk production results on the South Island. Some dairy officials also believe thatwhen released, April milk production data for the South Island will reflect lower YOY milkproduction. The dry conditions have prompted some dairy producers to dry their cows a bitearlier than normal as the season ends.

A large New Zealand dairy cooperative has begun a discussion process concerning its capitalstructure and possible changes. Topics being discussed include changing the shareholdingratio, which relates to volumes of milksolids, and adjusting how the shareholder’s fundoperates. It is anticipated that shareholders will vote on possible changes in the future.

New Zealand’s central bank has been encouraging dairy producers to use profits from higherdairy returns to pay down debt. The bank has also decided to reduce exposure to the dairysector by reducing dairy loans as a percentage of the portfolio, while increasing thepercentage of loans into sheep farming, beef farming, and horticulture. Dairy remains asignificant percentage of the bank’s loan portfolio. Moving forward, though, dairy willintentionally be a lower percentage.