Australian households can expect improved milk prices in 2024 after record-high dairy costs this year, new research has found.
Dairy prices reached record highs this year because of limited global supply and weather disruption, Rabobank found.
As 2023 comes to a close, Rabobank expects milk prices to drop 20 to 40 per cent lower compared to prices at the start of the year, largely because of decreased production costs for feed and fertiliser.
“We expect a slow recovery in dairy commodity prices back to long-term averages,” said Rabobank dairy analyst Michael Harvey.
“Peak food and dairy inflation have passed, but market uncertainty remains… low-income households are under the most pressure.”
The growth of Australia’s milk supply in 2024 will be very slow at 0.3 per cent as uncertain market conditions continue and El Niño causes dry conditions in farming regions.
Demand for dairy next year is also uncertain, with Australians likely to adjust their purchasing behaviours because of cost of living pressures.
Price volatility and market whiplash will remain a threat in 2024 because of global conflict and unstable energy markets.
While the report deals with milk as a commodity, it is unclear at this stage if any wholesale price reductions will flow through to consumers in supermarkets.
