Report 41 – Released on October 10, 2019

AUSTRALIA:

Milk production in Australia during August was 5.9 percent below August last year.

Production data for the first two months of the season are in the table which follows.

 AUSTRALIA MILK PRODUCTION, MILKFAT and PROTEIN

                            July - August 2019       August 2019

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

     New South Wales          179.0  -8.2            3.87    3.39
     Victoria                 870.5  -5.9            3.89    3.47
     Queensland                58.3 -13.4            3.98    3.33
     South Australia           65.4 -13.0            3.67    3.38
     Western Australia         60.1  -2.6            3.66    3.34
     Tasmania                  61.6  -8.0            4.37    3.55
     Australia (Total)      1,294.8  -6.9            3.90*   3.45**

     *  +0.7 percent from prior year period
     ** +0.6¬ percent from prior year period

     Data from Dairy Australia

Drought. Inadequate spring rainfall has left many Australian pastures in poor condition. Ironically, due to the nature of water law in Australia, some dairy producers and growers proximate to rivers are either not permitted to draw water, or, in many cases, are unable to pay for irrigation rights. This continues to adversely impact production and expectations. Water access is increasingly challenging for many dairy producers.

In the states of Queensland and New South Wales in eastern Australia, some wildfires have been burning since September. Sparse rainfall and continuing drought are cited as creating conditions to encourage these long burning fires. Herd reductions continue at an active pace. Stockyards are full of unwanted dairy cows. Some bankers in Australia project lower milk production this season, the same pattern as last season. While tighter milk supplies have helped maintain milk prices, higher costs for feed and water have limited the ability to translate prices into higher production.

In response, at least one Australian dairy coop announced a drought support premium payment to milk suppliers, hoping to induce more production. Many dairy producers feel as if they are sinking financially. It is a very difficult cost squeeze cycle. A significant increase in rain and soil moisture would help snap the cycle, but that does not seem likely anytime soon.

NEW ZEALAND:

New Zealand is at the calendar point where seasonal milk production typically is at the peak. Official data lags, but other factors lead many observers to be optimistic. Winter was mild. This helped lead to currently good pasture conditions. A result is comfortable feed reserves and early silage cutting. Calving is almost complete.

The resulting impact on milk production should soon be evident as data for October becomes available. While the consensus is that milk output will exceed the last season, some observers are less sure that the increases last season will be matched this season.

Active discussions continue as the government develops specific proposals governing freshwater management for various purposes, such as agriculture, recreation, urban development and safe drinking water. Public reaction is still being assessed as to dairy requirements which may limit growth, or even lead to a reduction in the dairy herd.

Information for the period September 30 -  October 11, 2019, issued biweekly

     Published by:
     Dairy Market News - Madison, WI
     Eric Graf, 608.422.8590
     Email: Eric.Graf@usda.gov

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