AS AUSTRALIAN milk production falls as much as 4 per cent for the fourth quarter in 2018, global production has also slowed, with just 0.6pc growth from the seven largest dairy exporters combined, according to Rabobank’s dairy quarterly.
National production for the 2018-19 season is expected to be below 9 billion litres for the first time since 1996-97, as a result of drought and increasing feed costs while European milk production has also stalled.
Meanwhile the United States is expecting its lowest year-on-year growth in 2018, just 1pc, since 2013.
Those bucking the trends include South America, which is lifting production about 1pc, while New Zealand production has risen 4.5pc, thanks to favourable seasonal conditions.
Report author Emma Harvey said there would be restrained production growth for all major export regions in the next 12 months.
For Australia, growth will be hindered by high fodder costs and reduced herd size.
To mitigate the rising costs, culling activity accelerated, up 15pc between July and September on the same period in 2017.
China remains a strong market for milk and is expected to increase its imports in 2019 by double digits.
Seasonally lower production during quarter three, combined with reasonable growth in processing demand means China’s inventory has been significantly depleted, Ms Harvey said.
“The country needs to step back into the international market to replenish the stock,” she said.
Based on Rabobank’s latest seasonal average Oceania commodity prices for the basket of major commodities, the weighted average farmgate milk price for southern Australia has been trimmed to $5.65 a kilogram of milk solids.