Australian Dairy Seasonal Outlook: Looking for a Firm Landing Zone

Australian dairy farm businesses can plan for another favourable season in 2023/24 and stretch the run of profitability into a fourth consecutive season.

• The upcoming season’s milk price will likely be lower than the lofty highs currently being offered across parts of the southern export region as a downturn in commodity and ingredients cycles through.

• However, there is a firm landing zone for new season milk prices, with stronger domestic returns, a weak Australian dollar, and aggressive recruitment and retention strategies all providing a buffering effect to the full extent of global pressures.

• Rabobank is forecasting minimum price offers for new season milk in southern Australia to be between AUD 8.50/kgMS and AUD 9.00/kgMS. Another season of historically elevated milk prices will support farmgate margins.

• Dairy farmers welcome relief from a record-high cost base as lower purchased feed and fertiliser prices flow through the balance sheet. However, there will still be other cost headwinds on the farm in 2023/24, and labour is a major headache.

• The performance of livestock markets will be a key factor to watch due to weak cattle markets and the uncertainty over the strength of China’s demand for live cattle.

• Consecutive seasons of farm sector profitability and industry stability provide an opportunity to rethink longer-term investment strategies, with a notable pickup in investment in labour efficiency and capacity projects.