Maxum Foods latest dairy commodity update paints a picture of a still-volatile market, as shifting milk output trends and evolving trade policies impact producers. The ANZ region maintains a strong front amidst weaker global production.
Australian milk output in southern regions slowed in December due to dry conditions. Although the weather outlook has improved, with a better chance of above-normal rainfall and higher temperatures across southern regions, milk supplies will become tighter through summer with slowing production.
Small raw milk price increases are likely in Southern Australia, with the easing of butterfat prices and possible pressure on global cheese prices. Overall, Australia reported strong growth in cheese exports, up 24 per cent YOY in the quarter to Nov-24, bringing the rolling annual exports 28 per cent higher YOY, taking advantage of the low AUD versus USD.
New Zealand producers have matched ingredient output to demand, firming up prices while meeting opportunities in high-protein markets. Milk output in H1-25 is heavily weather dependent but will likely sustain small year-on-year growth. Product mix remains a fine balancing act with limited growth in commodity milk powder output, despite lower European and United States output.
Compared to the ANZ region, the outlook in H1-2025 remains uncertain for Europe, heavily dependent on spring pasture conditions, ongoing effects of disease on productivity and weakening consumer sentiment. The butterfat market is weakening with higher seasonal availability, but the diverse milk supply landscape is expected to provide net small growth through H1-2025.
The continuing acute shortage of heifers has recalibrated expectations for US milk output, now expected to grow a little more than 1 per cent in volume in 2025. This will slow the rise in output of new cheese facilities. Cheese trade with contested export markets will remain a focal point in Q2-25, with improving US supplies and various influences on EU exports.
The protectionist trade agenda of the Trump administration may raise further tariff barriers for US trade (in and out) to impact whey protein and cheese markets. There has been evidence of front-loading of trade in several commodities. The impact of promised fiscal and monetary policies will continue to influence macroeconomic conditions.
