Australia’s milk production to hit 9 billion litres in 2021-22, commodity prices all-round strong

Headshot of Shannon Verhagen
Dairy cows.
Camera IconDairy cows. Credit: Danella Bevis/Countryman, Danella Bevis

Australia’s milk production is set to hit almost nine billion litres in 2021-22 as dairy farmers benefit off the back of good prices and strong seasonal conditions this year, according to a new report.

Cattle, grain and wholesale fruit and vegetable prices are also enjoying an upward trajectory this season.

In NAB’s June Rural Commodities Wrap, released last week, the NAB Rural Commodities Index up 2.5 per cent month-on-month in May, which is 6.2 per cent higher than the same time last year.

NAB Agribusiness economist Phin Ziebell said dairy opening prices reflected hot competition among dairy processors.

Get in front of tomorrow's news for FREE

Journalism for the curious Australian across politics, business, culture and opinion.


“Opening prices have been announced, and in the case of Saputo and Fonterra Australia, already stepped up,” he said.

“Saputo opened at $6.65/kg and stepped up to $6.85/kg three days later. Fonterra Australia opened at $6.55/kg but has likewise stepped up to $6.85/kg to stay competitive.

“Smaller processors are offering comparable opening prices. Bega opened at $6.80/kg for southern Victorian suppliers and $7/kg for northern Victorian suppliers, while Bulla is in the $6.40-6.90/kg range. ACM is at $6.85/kg but offering northern suppliers $7/kg.”

Mr Ziebell said Global Dairy Trade auction results had been flat to lower in US dollar terms since April, but overall producers should be pleased with the trajectory of both the GDT and local indicators.

“Wholesale prices are now at a level in Australian dollar terms to support farmgate prices in the high $6/kg range, representing a strong return for producers,” he said.

“A key pressure for the industry has been elevated feed and in northern Victoria, water costs, however, both have now eased substantially over the last 18 months. While we see feed costs having essentially bottomed out, a return to 2018-19 levels is highly unlikely this year.

“Milk flow has likewise stabilised and the latest forecasts from the Australian Bureau of Agricultural and Resource Economics and Sciences put production just shy of nine billion litres in 2021-22.”

Cattle and grain prices remain sky-high, with cattle prices close to record highs, while domestic grain prices increasing in response to a global rally.

“Australian grain remains competitively priced into South-East Asia, and with plenty of old season crop remaining, opportunities abound,” Mr Ziebell said.

“ABARES’ latest estimates for the 2021-22 winter cropping season point to well above average crop, driven partly by planting area, but most importantly, by improved yields driven by good subsoil moisture. ABARES sees a very strong 27.8 million tonnes of wheat this season.

“Price sentiment is likewise strong with domestic wheat futures back above $300/t, reflecting strong global demand fundamentals.

“Canola has been an absolute stand-out, supported by a big rally in global oil seeds, while barley prices are a little weaker than growers would perhaps like.”

Wholesale fruit prices were up 4.5 per cent in May, while vegetable prices jumped 23.7 per cent.

Get the latest news from thewest.com.au in your inbox.

Sign up for our emails