Global dairy prices have “rocketed upwards” as production has dropped sharply in key dairy export regions of Australia, New Zealand and Europe.

This was a key finding of banking company Rabobank, which also said, however, that dairy demand had strengthened in the US and Europe.

With any significant recovery in exportable volumes unlikely until the new Oceania season commences in the latter half of 2017 – and China set to make a meaningful return to the international market – the current price rally has further upside to come.

Rabobank's Dairy Quarterly report co-author Michael Harvey said that while prices had improved across the board, the recovery will remain “bumpy” as prices across the dairy complex become more divergent.

Results from the most recent Global Dairy Trade auction – where the index declined 3.9 per cent – provided confirmation of this bumpy road, with many buyers absent from the market due to the holiday season.

“Whole milk powder has posted the strongest recovery in recent months, with prices increasing by more than 45 per cent in the last six months of 2016, while consumer and foodservice demand for butter is behind much of the upswing in in dairy fat pricing,” Harvey said.

“In contrast, surplus protein stocks in the form of skim milk powder continue to weigh on the market, which has limited its upside.”

Harvey said the disparity in commodity prices had limited the ability of Australian producers to capture the rally in global prices – although there has been some positive movement in farmgate milk prices in recent months.

“Whole milk powder makes up less than 10 per cent of the Australian product mix with our focus on cheese-and-whey products due to contractual arrangements, so this has muted our ability to capture much of the increase in global prices this season,” he said.

“That said, with all dairy prices set to improve over coming months, it has considerably lifted expectations amongst Australian farmers for stronger opening prices in the 2017/18 season.”

Seasonal conditions permitting, it will take some time for improved farmgate prices to translate into a recovery in Australia’s milk supply volumes, with production pegged to fall by seven per cent this season.

Packaging News

Plastic packaging is among the flotsam washing up on East Coast beaches after cargo vessel APL England on Sunday lost 40 shipping containers overboard in heavy weather.

Foodmach has beat deadlines to get surgical mask-making machines designed, built, and running to help boost the Australian supply of this essential piece of PPE.

PacPrint, the four-day show held in conjunction with Visual Impact and the Label & Packaging Expo, will now be held from 28 September through 1 October next year.