Milk production in Australia in 2021 is forecast for a further increase to 9.2 million metric tons (MMT) on the back of a dramatic turnaround in 2020 as a result of drought-breaking rains and an excellent pasture and crop growing season in eastern Australia. Milk production conditions continue to be favorable in 2021, including strengthening milk prices. However, the year-to-year increase in milk production is smaller than previously estimated as some dairy producers continue to exit the industry and some dairy farms shift to beef production. Fresh milk consumption in 2021 is forecast to remain stable, with a small increase in factory use consumption, primarily for cheese. Cheese production is set to expand three percent in 2021 taking up 60 percent of the manufacturing milk volume.