January 3, 2007

Australian drought to cut dairy exports
 

The drought is tipped to cut Australia's milk production and dairy exports this financial year but analysts are still bullish.

Milk output would fall nearly 11 percent to 9 billion litres in 2006-07, said the Australian Bureau of Agricultural and Resource Economics in its latest commodities report.

This would be the lowest in a decade. After a good start to the season, the persistent drought and little water for irrigation hit pasture growth, driving up fodder costs, ABARE said.

This led to many farmers drying off cows early and reducing numbers.

Though farm-gate milk prices would also fall, Rabobank senior dairy analyst Tim Hunt said that despite falling prices, pricing would remain firm in coming years because of strong global demand.