Industry experts are tipping “conservative” 2026-27 farmgate milk prices, but farmers warn anything below $10/kg of milk solids will deepen margin pressure.

A Bendigo Bank report forecasts southern Australia’s full season farmgate milk prices at about $9.40/kg of milk solids, citing a stabilising milk pool, strong global supply and rising processing costs as key constraints on opening prices.

For Larpent farmer Mark Billing, the numbers don’t stack up. He estimates his cost of production at $9.50/kg milk solids, with current season prices averaging $9.20-$9.30/kgMS.

“If we have processors trying to protect their balance sheets it’ll be at the peril of farmers,” he said.

“Added to that is the recovery from the drought, a lot of farming businesses are really struggling with cashflow, as they’re emerging from the drought and hangover in southwest Victoria.”

Mr Billing said input costs continued to climb sharply.

“It’s got to go up the supply chain, I’ve got a quote on fertiliser today and it’s basically double what it was in spring last year,” Mr Billing said.

Bendigo Bank agribusiness industry insights senior manager Eliza Redfern said national milk production was expected to hold at about 8.2 billion litres, depending on seasonal conditions, pointing to a more stable milk pool.

However, she warned the Middle East war could disrupt exports, tighten packaging supply and push manufacturing and input costs higher.

At the same time, global supply remains strong, with milk flows continuing to grow across key exporting regions including the US, Europe and New Zealand.

“There’s a lot of milk in the system and over the past couple of months that strong global supply situation has been outweighed by increased buying activity,” Ms Redfern said.

But momentum may be easing. The April 7 Global Dairy Trade auction indicated activity was starting to slow, with prices expected to soften. Ms Redfern said while no specific outlook had been set for WA or Queensland, prices in those regions typically follow broader national trends.

A drier three-month outlook flagged by the Bureau of Meteorology could also weigh on production in key dairying regions, although many farmers entered the year with strong spring conditions and homegrown feed reserves.