The Current Season
On this page:
Farmgate milk prices for the current season (announced in June) for southern Australian milk producers remain under the strong influence of domestic market requirements for fresh milk, natural cheese, cream and fresh dairy foods.
Domestic dairy product prices have softened as a result of stronger milk supplies in major global exporters to the world market in the past year and costs have lifted as a results of geopolitical volatility.
As a result, the 2026-27 opening prices announced by major manufacturers are broadly in line with the closing price last season reflecting weaker commodity returns and higher processing costs.
It’s also important to remember the announced FMP are minimums for the season, with incentives on offer and the possibility of price reviews if global market conditions improve.
The competition for milk at farmgate is more muted for the start of the 2026-27 season compared to a year earlier due to higher input costs along the supply chain and weaker demand signals.
Domestic wholesale product prices have softened for cheese and butterfat and are higher than Oceania spot export prices (based on New Zealand quotes).
EU butter and cheese values have moderated, removing the strong price floor they provided for Oceania markets a year earlier. NZ processors have increased output in line with improved milk flows, but weaker demand for WMP and SMP in key Asian markets has kept pressure on Oceania commodity prices. Butterfat and cheddar values have eased from their 2025 peaks, while SMP remains subdued due to ongoing demand softness across Southeast Asia and China.
Domestic Australian dairy product prices continue to adjust with a lag, reflecting contract cycles and heightened price sensitivity among consumers in a weak economic environment. Wholesale prices for cheese and butterfat have softened but remain above Oceania spot export values.
The commodity milk value based on NZ spot export prices has fallen to A$7.55/kgMS in June, while the Australian CMV averaged A$9.00/kgMS. These compare to the Southern Australian average farmgate prices ranging from $8.80 to $9.50/kgMS for the 2026-27 season.
In New Zealand, Fonterra’s 2026-27 expected milk price has a mid-point equivalent to about A$8.10/kgMS (adjusting for exchange rates and crude protein), wiht the gap narrowing as both domestic and NZ prices are lower.
The projected full-season cost of raw milk to dairy product manufacturers with exposure to global markets for SMP and cheese is more sustainable and in line with market returns based on current market outlooks.
European dairy markets have softened as milk production has stabilised following earlier disease and sustainability pressures. Butterfat and cheese prices have eased as supply improved and demand moderated. This has reduced the upward influence the EU previously had on global fat and protein values.
In the US market, domestic demand remains weak, but lower feed costs and improved production conditions have allowed milk output to expand. With herd numbers no longer tightly constrained, the tension that supported US farmgate prices has eased, contributing to softer SMP and cheese prices on global markets..
NZ milk prices are weaker with demand from China and Southeast Asia remaining soft as lower returns across commodities flow through to reduced expected farmgate prices.
© 2020 Milk Value Portal
Developed by FreshAgenda