Dairy Australia update: Production regains momentum after rain softens feed and forage price

Production levels have been mixed so far this year for Australian Dairy producers. Beginning with a dry season and expensive feed costs, production was from July - September was 2.4% below the same period the year previous. Autumn brought good rain, with good pasture growth allowing feed prices to return to near normal levels, promoting stronger milk production. As a result, overall levels this year are thought to remain steady, down 0.7% year to date (end of March) on the previous year.

Looking forward, milk production is forecast to drop 2% next year. Current momentum from the good rainfall in most dairy regions means the short-term outlook is positive. But as a result of the conflict in the middle east, increased fuel (price up 60%) and fertiliser prices (urea up over 80%) are putting a downwards pressure on the production of milk in Australia.

Milk volumes have varied between regions, primarily due to the differing weather and pasture available. Victorias production dropped 1.5% year to date, while South Australia has had a very poor season, with production set to decrease. New South Wales has seen a 2.6% increase year to date, and Tasmania up 2%. Western Australia production has increased 2.6% in the 9 months ending March.

Domestic consumption remained overall steady, with more than 95% of shopping baskets having dairy products in. Retail space has had changes, with Greek yogurt having a bumper year up double digits, butter performing well up 1.7%, but butter blend products down 2.1%. Plant based dairy alternatives have decreased for the first time in a long time, down 2.9%. This is thought to be shoppers looking for whole products rather than processed ones.

Cull cow price has remained high circa 350p/kg lwt from September 2025. Total head going for cull did drop right off in the first half of the season but has started to increase again from December onwards.

In the National Dairy Survey, 4/5 farmers stated they were optimistic about the future of their businesses. When this was collected, the conflict in the middle east had only just started, but farmer optimism still seems to be high despite the impacts being felt.

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