Bega Cheese is the latest business to issue a profit warning regarding its 2020 earnings, saying its performance would be affected by what it called “unprecedented” competition among processors for milk and softer demand for exports.
Bega Cheese was "dressed" to win yesterday, a burst of enthusiasm for Mineral Resources ran out of puff, while Securities in Dexus went into a trading halt on reports it was looking to raise around $1 billion.
Long synonymous with struggling dairy farmers and perpetual milk glut, Australia’s dairy market is rapidly tightening as the producers compete more aggressively for supply that has been eroded because of drought.
Bega Cheese has increased the pace of cost-cutting as it seeks to digest its various expansionary moves of the past year or so and meet the challenge from the deep drought that has hit the dairy industry much harder than anyone had forecast.
As dry conditions continue and farming costs increase, Australia's milk supply is expected to decline again in FY20. Dairy Australia forecasts Australian milk supply to contract a further -3-5% in FY20 after declining by -7-9% in FY19.