Report 21 – Released on May 27, 2021

AUSTRALIA:

Australian fluid milk exports continue to expand. July 2020 – March 2021 milk exports fromAustralia 209,940 MT, increased 17.8 percent from July 2019 – March 2020, according toDairy Australia.

A large Australian and New Zealand dairy cooperative recently affirmed the coop’s intentionto remain committed to operations in Australia. An executive affirmed that the currentAustralian milk price is sustainable, as it is supported by earnings and is not coming fromthe balance sheet.

This follows a decision to close an aging dairy plant in Dennington which led to somespeculation that financial viability was suffering or that coop assets were going to besold. The coop official said that plant has an aging open top drier, which presentedproblems with foreign matter and hygiene. The representative said the decision to close wasrelated to moving toward focusing production in more efficient plants. Additionally, thedecision to resume control of a Gippsland dairy plant at Darnum from a Chinese based jointventurer was attributed to affirming the production focus preferred by the Australianowners, which the official said was not always in harmony with goals of the Chinese basedjoint venturer.

Mice have overrun New South Wales. The situation is called a plague. This impacts dairyproducers because hay in many sheds has become massive mouse hotels, in which the mice areeating and contaminating grain and other feed. Aside from that, it is unsettling to the cowsto have plague levels of chirping, squirming mice all about. The situation stems fromabundant rain, which created bumper crops. Reports say this led to ideal conditions for micebreeding. Various eradication measures are under consideration. The primary disagreement nowis whether to use various poisons.

NEW ZEALAND:

April 2021 New Zealand milksolids and tonnage reported by DCANZ and NZX are up 11.6 percentfrom April 2020 milksolids. Season to date milk solids and tonnage through April 2021increased 2.4 percent from last season through April 2020.Sources in New Zealand cite the high production increases as making the higher recentvolumes of WMP and butter offered at GDT events possible.

January – March 2021 bulk and packaged milk exports from New Zealand 73,000 MT, increased27.4 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, 58,588 MT, +48.05 percent; Taiwan, 3,567 MT, -14.01 percent; andPhilippines, 3,317 MT, -35.55 percent.

With the new dairy season beginning June 1, 2021, focus on new season milk priceexpectations is active. NZX affirmed its forecast of 8.36 New Zealand dollars/kg milk solidsfollowing the May 18, 2021 GDT event. However, there are factors that may dampen themagnitude of milk production increases which might be expected to be generated by a highermilk price. Higher feed prices are one such factor. Another is tighter capital availability. Also, possible regulatory changes related to carbon sequestration may put pressure onproductivity. Waikato also remains unusually dry after two seasons with low rainfall. Goodrain is needed to refill groundwater, which would help pasture growth.

Continuing impacts of dairy product shipping delays have now manifested in lower FY forecastearnings by a New Zealand dairy. FY 2021 guidance was just downgraded. A factor cited wasongoing shipping delays which will result in the sale of some ingredient products after theFY 2021 balance date. Also cited was adoption of a more conservative approach to year-endinventory volumes and valuation.

A large New Zealand dairy cooperative is closing an eastern Victoria dairy processingfacility at Darnum for five weeks for planned multi-million New Zealand dollar maintenance. Milk that would have been processed in the facility will go to Stanhope to be used forcheese-based products.