In an environment where processors are battling to secure milk, Australian Dairy Farmers Corporation has released its opening milk price with a range from $5.60/kgMS to $6/kgMS.
A letter written by ADFC chairman Scott Sieben outlined the top price was on offer for those who have a milk supply ratio of more than 44 per cent (producing more than 44 per cent of their milk in March, April, May, June, July and half of February and August).
The lowest price was for those who produced less than 39 per cent during this time. The middle bracket — those who produced between 39-44 per cent — were offered a price of $5.80/kgMS.
This opening price letter comes after negotiations between Bulla Dairy Foods and ADFC broke down last month. ADFC supplied about 200 million litres of milk a year to Bulla at Colac.
Bulla has released its own opening milk price for next season and is seeking its own milk supply for the first time. ADFC has not disclosed yet where it will send its milk after the end of this season and its contract with Bulla is finished. ADFC also supplies milk to ProCal. Last month Mr Sieben told The Weekly Times the milk had a “home” without providing any more details. The letter to suppliers today didn’t disclose any details about where milk would be supplied.
Mr Sieben thanked suppliers for their “patience during this challenging period of change within our business”.
“This past month has certainly championed my view that the strength within a large supply group is very valuable,” he wrote.
“The opportunities that continue to develop for ADFC are pleasing and I look forward to sharing these with you at one of our supplier meetings in the coming weeks.”
This opening price news comes as Fonterra announced an opening milk price in New Zealand of $NZ7/kgMS ($6.40/kgMS) for its new season starting June 1.
In a statement, Fonterra chairman John Wilson said the strong opening milk price would be very welcome news for the co-operative’s farmers as they look ahead to the new season.
“What we are seeing is a continued positive global supply and demand picture which gives us the confidence to increase our current forecast farmgate milk price into the new season.
“Demand is expected to remain strong — especially from China and for butter and MAMF. We are expecting the global dairy market’s current prices, especially for fats, to continue throughout the new season..”
Fonterra also increased its price for this season from $NZ6.55/kgMS to $NZ6.75/kgMS
($5.99/kgMS-$6.18/kgMS) and cut its dividend range by NZ10c (8c) to NZ15-20c (11-15c) a share.
New Zealand bank ASB described the Fonterra forecast $NZ7/kgMS price for next season as “more bullish than we expected”. ASB had predicted $NZ6.50/kgMS ($5.94/kgMS).
“For now though the bullishness is being tempered by mycoplasma bovis concerns,” ASB said.
“As a result, farmers are unlikely to act on the strong milk price outlook and their spending and investment plans are likely to subdued until mycoplasma bovis concerns recede.”
By: SIMONE SMITH
Source: The Weekly Times