Meanwhile, milk production in Australia in the 2023-24 season, which ended in June, was 3.1 per cent higher on the previous year at 8.4 billion litres (an increase of 249 million litres).
However, the bank is expecting Australian production to grow at a lower rate in the 2024-25 season – currently forecast at 1.5 per cent.
RaboResearch senior dairy analyst Michael Harvey said Australian milk supply growth had been widespread, with production expanding in all states and regions, with the exception of western Victoria (where dry conditions have constrained production).
NSW had “led the charge”, recording impressive growth of 5.3 per cent in milk production for the 2023-24 season.
“Seasonal conditions remain mixed though across the key dairying regions,” Mr Harvey said.
“There have been severe rainfall deficiencies so far in 2024 for western Victoria and South Australia, which are sizeable milk production regions.
“However, seasonal conditions elsewhere have been mostly favourable.”
The global dairy market remains “balanced, but sensitive to change”, the report said.
And the next year could see significant shifts as production increases and markets adjust.
Mr Harvey said milk production from the main global export regions had been elusive over recent years.
“Since the second half of 2021, combined milk production from the Big-7 dairy export regions – the EU, the US, New Zealand, Australia, Brazil, Argentina and Uruguay – has only grown in three quarters,” he said.
However, high dairy prices in the first half of 2024, plus lower feed costs, have improved farmer margins, encouraging production.
RaboResearch expects milk supply from the major exporting regions to increase a modest 0.14 per cent in 2024 on the previous year.
“With producers seeing improved margins though, milk supply could make a distinct shift upward in 2025,” Mr Harvey said.
“Our initial forecasts for 2025 suggest a 0.65 per cent year-on-year production lift from the Big 7, bringing global milk supply from these regions above the five-year average.”
The report said demand for dairy remained mixed across regions.
“At a retail level, price deflation continues to occur within supermarket aisles in South America, the US and in most of the EU,” Mr Harvey said.
“In response to weak consumer spending in food service channels, companies are spending more on promotions and advertising as consumers ‘pinch pennies’.”
Both demand for and production of milk are expected to decline in China, the world’s largest dairy importer.
Mr Harvey said RaboResearch had revised down its estimates for Chinese dairy consumption for 2024.
