Executive Summary

Australian milk production figures provided by Dairy Australia were recently updated with values spanning through the end of the ’20-’21 production season. Highlights from the updated report include:

• Australian milk production declined on a YOY basis for the first time in the past three months during Jun ’21, finishing down 1.1%. ’20-’21 annual production volumes increased 0.9% from the previous year, however, rebounding to a three year high level.
• The Australian dairy cow herd is projected to decline 0.7% throughout the 2021 calendar year, reaching a record low level, as some dairy producers continue to exit the industry and high beef prices have encouraged others to shift to beef production.
• Australia is the fourth largest global dairy exporter, accounting for 4.9% of combined butter, cheese, nonfat dry milk and whole milk powder exports throughout 2020. The bulk of Australian dairy exports are in the form of cheese and nonfat dry milk.

Additional Report Details

According to Dairy Australia, Jun ’21 Australian milk production volumes declined on a YOY basis for the first time in the past three months, finishing down 1.1%. Despite the recent decline, Australian milk production volumes have remained higher on a YOY basis over 13 of the past 18 months through Jun ’21, a result of drought-breaking rains and an excellent pasture and crop growing season in eastern Australia.

’19-’20 annual Australian milk production volumes declined by 0.2% on a YOY basis, reaching a 24 year low level, as a 4.0% YOY decline in production volumes experienced throughout the first half of the production season more than offset a 4.9% YOY rebound in production experienced throughout the final six months of the production season. ’20-’21 annual production volumes rebounded by 0.9% on a YOY basis, however, reaching a three year high level. According to the USDA, improved fodder and grain availability, coupled with strong milk prices, have helped strengthen milk production volumes throughout the most recent production season.

Recently experienced low pasture volumes and supplementary feed on hand contributed to the Australian dairy cow herd contracting by 5.6% throughout 2019. Australian dairy herd figures declined by an additional 1.4% throughout 2020, despite improvements in pasture conditions, due to biological lags in herd rebuilding. The USDA is projecting the Australian dairy cow herd will decline by an additional 0.7% throughout 2021, reaching the lowest figure on record, as some dairy producers continue to exit the industry and high beef prices have encouraged others to shift to beef production.

Australia is the fourth largest global dairy exporter, trailing only New Zealand, the EU-27+UK and the U.S. Of the top five dairy exporting regions accounting for over 90% of total global dairy exports, Australia accounts for 3.0% of total combined milk production and 4.9% of combined butter, cheese, nonfat dry milk (NFDM) and whole milk powder (WMP) export volumes throughout 2020.

The bulk of Australian dairy exports are in the form of cheese and NFDM. Australia was the fourth largest exporter of both cheese and NFDM throughout 2020, accounting for 7.2% of global cheese export volumes and 5.3% of global NFDM export volumes. From a global perspective, cheese and NFDM Junkets may be most affected by a continued rebound in Australian milk production.