THE stabilisation of world dairy commodity prices is likely to be a positive influence on the forthcoming season’s milk prices, a Dairy Australia analyst says.
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John Droppert said the recent price falls in world dairy commodity prices, particularly for milk powders, at Global Dairy Trade auctions had eased compared to the drops in the market earlier this year.
Mr Droppert said world dairy commodity prices were more likely to go up than down but the question was when.
Falls in the value of Australian currency in the past 12 months had also favoured dairy processors’ exports and should bolster the prices to be offered, he said.
“There are some things working for us at the moment,” Mr Droppert said of the outlook for milk producers on prices.
Another factor processors will consider in setting their prices is the mix of dairy products they intend to target in the next season.
The cheese market had been a target in 2014-2015 but skim milk powder, butter and butter fat were presently selling at decent prices, Mr Droppert said.
“It comes down to whether they (processors) give themselves room to move (on prices),” he said.
Murray Goulburn has indicated a closing price for the forthcoming season of $6.05/kg/milk solids while Burra Foods has forecast prices could hit $6.20/kg/MS.
Rabobank analyst Michael Harvey has said there was "potentially not much upside in 2015-16 from $6 (kg/MS), unless the commodity markets improve."
Farmer activist group Farmer Power said dairy processors needed to pay at least $6 a kg for milk in the coming season for dairy farmers to remain viable,
Dairy processors had to realise that “paying a fair price at the farm gate is the key to the growth of the dairy Industry,” Farmer Power spokesman Chris Gleeson said.
“It is time for manufacturers to show leadership in their important role for the dairy industry and start to deliver a price for confidence and growth,” Mr Gleeson said.
He also said the practice of processors of announcing their opening milk prices at “the last minute” was “not working” for farmers.
United Dairyfarmers of Victoria president Adam Jenkins said the Indicative season forecasts issued by dairy processors were subject to change and the actual prices should be announced as soon as possible.
