Report 37 – Released on September 16, 2021

AUSTRALIA:

July milk production in Australia was weaker than expected to start off the 2021-2022 milkseason. However, industry sources suggest plentiful rain, good soil moisture levels and goodpasture growth may help support an increase Australian milk output for the upcoming months.The Australian Bureau of Meteorology predicts above average rainfall for September toNovember in some of the main dairy regions of Australia, promoting strong pasture growth andmilk yields. In addition, lower interest rates, solid milk prices and stable dairy productdemand may help farm profitability and boost farmer confidence. Current Australian raw milkprices are roughly AU $7.50/kg MS, up significantly from 2017 and 2018. However, farm exitsand lower herd numbers could limit the growth of Australia dairy production.

AUSTRALIA SECONDARY DATA:

According to Dairy Australia, July 2021 milk production, 606.9 million liters, was down 3.5percent from July 2020.

July 2021 milk exports from Australia 39,593 MT, increased 74.3 percent from July 2020,according to Dairy Australia. According to CLAL data made available to USDA, January – July2021 bulk and packaged milk exports from Australia, 161,000 MT, increased 19.6 percent fromJanuary – July 2020. The main export destinations January – July 2021, quantities, andpercent change from January – July 2020, were China, 79,191 MT, +59.56 percent; Singapore,28,435 MT, +2.27 percent; and Malaysia, 12,331 MT, -7.88 percent.

NEW ZEALAND:

In a reversal of fortunes, prices for all commodities offered on the latest GDT event movedhigher. Processors had been signaling tighter supplies for dairy products for several weeks,but buyers were slow to respond until now. As a result of the GDT event results, severalindustry analysts raised their milk price forecasts. They cite the firming market prices,subdued supplies and an uptick in demand as fuel for the upward moving forecasts. However,some other analysts urge caution. Increases in Chinese dairy production and growing dairyproduct inventories in China could weigh on dairy markets. Current New Zealand milk priceforecasts range from NZ $7.80 to $8.30 per kg MS.

The New Zealand 2021-2022 milk season is still taking shape, but so far, so good, accordingto industry contacts. Adequate soil moisture and pasture growth are supportive of solid milkyields. Calving is nearing completion, and initial projections of milk output are favorable.Industry weather watchers are keeping an eye on the potential development of a La Nina eventthis year. This could lead to warmer, drier conditions in the lead up to the southernhemisphere summer.