What is the situation and outlook for the Australian dairy industry?

Dairy Australia released the latest Situation & Outlook report yesterday.  The key points made in the report are;
 
• The international market outlook remains fairly positive with strong demand, however the strengthening Australian dollar has the potential to constrain exports.

• The forecast opening farmgate price for southern regions is $4.60 to $4.90, an improvement from 2010.

• In contrast, increasing pressure on domestic profit margins and reduced requirements for milk from some processors could reduce new contract prices for farmers in northern New South Wales, Queensland and Western Australia. However this needs to be balanced against a need to stabilise regional supplies.

• Milk production is forecast to increase by 1 to 2% in 2011/12, reflecting expected increases in the number of cows milked and generally favourable seasonal conditions.