Australia’s milk production will fall to its lowest level in almost a quarter of a century amid “widespread drought” conditions, US officials said – ditching ideas of a gain in volumes .
The US Department of Agriculture’s Canberra bureau slashed by nearly 1m tonnes to 8.52m tonnes its forecast for Australian milk output in calendar 2019.
The downgrade took the figure well below the USDA’s official forecast of 9.30m tonnes, and the 9.32m-tonne total for last year, to the lowest since 1995.
The bureau attributed its revision to persistent dryness in Australia, saying that “the effects of the widespread drought in New South Wales and Victoria have had a significant impact on the dairy sector”.
Prospects had worsened particularly since dryness had spread to Victoria, which accounts for more than 60% of the national dairy herd.
’Does not auger well’
In the two states, “pasture volume levels were comparatively low at the beginning of May and feed supplement volumes held on farm were generally at low levels as well,” the bureau said.
“This combination does not auger well for farmers being able to set their farms up satisfactorily to feed their cows going into calving in August and further out to early lactation in September.”
The bureau noted too a forecast from the Australian Bureau of Meteorology that the July-to-September period will be drier and warmer than normal for the two states.
While farmgate milk prices have risen sharply, an incentive to farmers to boost production, “with cow numbers estimated down by 3-4% in 2019 and the lingering effects of the drought, it is difficult to argue against the negative forces continuing to depress milk supply through until the end of 2019”.
The bureau added that said the milk production cut would affect output across most dairy commodities, except for cheese which, because of “good profitability processors”, would see production maintained at 366,000 tonnes.
Skim milk powder production for 2019 was expected to fall 16% year on year to 75,000 tonnes, with declines too in butter and anhydrous milkfat (down 19%) and whole milk powder (down 18%).
Double-digit output drop
The report comes a week after Dairy Australia reported Australian milk output in May down 13.6% year on year, led by a 15.1% drop in Victoria volumes.
The result took the decline volumes for the first 11 months of the 2018-19 marketing year, on a July-to-June basis, to 7.7%.
The industry group was also downbeat on Australian milk output ahead, saying that “whilst confidence has improved more recently… a further drop of between 3% and 5% in total milk production for the 2019-20 season” was expected.
Production would be “weighed down by the impact of reduced herd sizes and strained finances from the 2018-19 season”.