Fall in dairy commodity prices and milk production in June, Rabobank says

The bank said the weakness in the dairy commodity markets was not surprising given large importers had accumulated short-term inventory cover and at the same time, the northern hemisphere milk production season peaked.

Senior dairy analyst Michael Harvey said there was a flurry of milk price announcements and even in some cases, processors revising their prices before the season started, in response to competition.

‘‘Opening prices are at record highs, which will be supportive of cashflow at the start of the season,’’ Mr Harvey said.

‘‘Based on current global commodity prices forecasts, Rabobank models a price of $6.60/kg milk solids.

‘‘Official milk price indicators in the market for 2019-20 are above this price and this can largely be attributable to the competitive landscape among dairy companies for milk supply.’’

Rabobank is forecasting a continued decline in national milk production in the current year.