Dairy industry heading in the right direction says Rabobank analyst

August 01, 2017

Invergordon's Tim Van Popering and Luke Minogue of Katandra attend the Shepparton Murray Dairy event.

Despite milk supply falling to a two decade low in the past two years, a Rabobank senior analyst has said the tide is turning for the dairy industry.

Rabobank’s Michael Harvey was speaking at a Murray Dairy-run Setting Up Your Season Workshop on July 20 in Shepparton and said northern Victoria had been hit hard.

‘‘In the last two years, 795 million litres of milk has been lost,’’ Mr Harvey said.

‘‘That’s a 10 per cent loss nationally. Fifty per cent of that loss was from northern Victoria.

‘‘Despite Russia’s ban on imported agricultural products being extended in Europe for yet another 12 months and Australia’s long-term future with exporting to the country unknown, export returns have improved for milk powder, cheese and butter.

‘‘Export returns have improved but it’s not uniform. Farm gate prices are increasing on the global export market and there is more milk on the horizon and (most importantly) there’s a market for that,’’ Mr Harvey said.

‘‘The market is firmer than we thought and looks stable for the next 12 months. It is looking like being balanced but reliant on the China market.

‘‘The butter price is well above what we expected and the same with cheese.’’

Despite the global market heading in the right direction, Mr Harvey said in the near future he would be watching for market variables such as trade restrictions, European Union stock liquidation, fat substitution, China imports and the Russian embargo on agricultural products.

With all this in mind, Mr Harvey said the 2017-18 season was likely to be a season of transition and consolidation for many dairy farmers.

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