Dairy inputs heading in the right direction, providing farmer certainty

DA industry analyst Isabel Dando said at the end of January, soil moisture across much of central and eastern Australia was above average, after widespread storms brought heavy falls.

In late January, the average price of water in northern Victoria was $58 megalitre.

Water levels in all monitored storages across Victoria remained above 90 per cent capacity, apart from the Hume Dam

Temporary water prices continued to soften, falling a further 47pc across northern Victoria and 32pc in the Murray Irrigation system during January.

Cereal hay was selling for $303 a tonne, at a similar price to 12 months ago, but protein hay was down by 18 percent on 2023 to $379/t.

Cereal grain was selling for $345/t, a drop of 12pc on last year.

Ms Dando said the escalating tension within the Red Sea region was exacerbating the threat of longer routes, higher freight rates and longer sail times.

"While the impact on other commodity prices has been fairly limited thus far, the urea market is in the firing line, due to the millions of tonnes of fertiliser that move through this passage each year," she said.

"There has been minimal movement in indicative fertiliser values this month, with diammonium phosphate (DAP) prices rising slightly, while urea and muriate of potash (MOP) eased slightly, both down 5pc."

Recent DA figures show a big increase in milk production.

Leitchville, Vic, farmer Bernice Lumsden, who runs a 700 head herd, said water was the north's number one input cost and concern.

She said she had bought it recently for $32/ML.

"The water price is good, and everything else is acceptable, so we are happy with our input costs," Ms Lumsden said.

"Fertiliser is not too bad, grain is not too bad - it's a bit high as it's tracking around $340 a tonne.

"Because we knew what our milk price is until June, these water prices gave us the confidence to grow as much as we could.

"It means we can plan our business forward and be confident in our ability to deliver a quality milk product, in the volumes we want to."

She said the farm was currently growing corn and millet.

"We are going aggressive with our watering now, we are ready to start sowing the ryegrass program at the end of February - we are going earlier this year," Ms Lumsden said.

"We are planning to maximise our ryegrass and do some paddock preparation - without access to cheap water we wouldn't necessarily have done that."

Longwarry, Vic, dairy farmer John Versteden also has a 700-head herd and said margins were as good as they had ever been.

"I don't think anyone has too much to complain about, at the moment," Mr Versteden said.

"We need to be cautious, we know things don't stay like that - but it's an interesting point in time for the industry.

"Margins are good, but there are obviously those things that can change, milk prices are obviously going to be under pressure."

Farmers had no control over issues overseas, which could have sudden impact, he said.

"There are pirates in the Red Sea, at the moment, who would have thought?," he said.

"It makes you think how do we protect ourselves from that, going forward.

"When you see the volatility surely we can actually do stuff, maybe within Australia, that stops that happening."

Dairy Farmers Victoria president Mark Billing, Colac, Vic, said the season had been "reasonably favourable," although recent storms in Gippsland might have an impact on production.

"If we see an uptick in the global milk price, from where it's been, we may see similar prices going into next year," Mr Billing said.

That would be positive for farmers, if inputs were kept at a "manageable level,"he said.

There were still some concerns over skilled labour shortages, although backpacker levels had returned to those experienced pre-COVID.

"On balance, it is looking pretty good, pretty positive," he said.

Logistics issues would have an impact on fertiliser and machinery parts, but he said he was unsure as to what extent.

"Container availability is one that needs to be watched pretty closely, over the next few months, as well," he said.

"The planets are starting to align, but it won't be too long before we start looking at what the markers are showing as far as milk prices will be for the next season."