Report 43 – Released on October 28, 2021

AUSTRALIA:

While the Australian milk production season is off to a slow start, industry analysts expectthe country may still generate as much, or more milk than last season. Rain and cool weatherhave restrained milk outputs in the first few months of the milk season, but farmers expectthe moisture will aid in pasture and forage growth later in the summer, reducing the need tobuy supplemental feed later. In addition, many Australian farmers had a strong carry over offorages from last year. The lower feed costs may encourage some farmers to expand their milkproduction. Analysts anticipate expanded opportunities for dairy exports and strong dairycommodity prices should help improve dairy farm economics in Australia.

Dairy industry sources are concerned about recent vaccination mandates going into effectwithin Australia. Under the rules, farmers could have the dilemma of facing large fines forunvaccinated workers or laying off workers at a time when it is very difficult to getemployees in rural areas.

NEW ZEALAND:

New Zealand milk production for the 2021-22 season is lagging behind last season. Asexpected, September milk production was below the record levels set last year, but it isalso the lowest it has been since 2017. Cold, wet weather and low light levels have hinderedpasture performance and milk production. Warmer, drier conditions have become more common in October, but industry sources think that October milk intakes may also be weak beforeimproving in November and December.

A strong showing for all commodities on the latest GDT event and milk supply volumes belowexpectations have prompted several industry organizations to lift their milk price forecastsonce again. Currently, forecast midpoints range between NZ $8.40 to $8.75 per kg milksolids. However, in some of the forecasts, there is a variance of up to $.50 either way totake market uncertainties into account. Industry contacts think that because of marketuncertainties and on-farm challenges, farmers may still find it difficult to grow milkproduction. Labor shortages, supply chain issues and higher costs may keep margins tight inNew Zealand.

Farm labor is still critically short within New Zealand. The dairy sector has had fewerworkers coming into the country because of COVID-19 measures, and workers have left thecountry to seek employment and residency opportunities elsewhere. Dairy sector officialsestimate the industry is short 2,000 to 4,000 workers. Efforts to create border exceptionsfor up to 200 agricultural workers through the managed isolation and quarantine (MIQ) systemhave only created limited results. It takes farmers a lot of time and expense to coordinateand navigate through the system.

New Zealand and the UK have developed a free trade agreement that will effectively eliminatetariffs on New Zealand agricultural goods. Cheese and butter will have tariff-free quotasthat will expand over the next five years. At the end of the five years, trade will be freeof tariffs. Negotiators must finalize the full legal text and wrap up negotiations beforethe agreement comes into force. The countries hope to have that work completed by the end ofthe year.

NEW ZEALAND SECONDARY DATA:

September 2021 New Zealand milk solids reported by DCANZ and NZX are 215,896 million kg,compared to 224,852 million kg in September 2020. According to CLAL, New Zealand season-to-date milk production through September 2021 is 4.526 million MT, compared to 4.692 millionMT June through September 2020, down 3.54 percent.

Information for the period October 18 - 29, 2021, issued biweekly

     Published by:
     Dairy Market News - Madison, WI
     MIKE BANDLI, (608)422-8592
     Email: mike.bandli@usda.gov

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