South-west dairy farmers have been left hanging on for prices above $6 a kilogram milk solids (kgms) for the next milk season after Fonterra’s opening price did not significantly challenge that of Saputo’s.
Fonterra last week announced an opening milk price of $5.85 kgms for 2018-19, slightly above the $5.75 kgms that Saputo announced earlier last week.
Many farmers had been hoping for an opening price above $6 kgms to rejuvenate the market after years of low prices.
Fonterra forecast its closing average milk price range for 2018-2019 would be between $5.85-$6.20kgMS but said the opening $5.85 reflected what the company could currently earn in the market.
Long-time Fonterra supplier Con Glennen of Noorat said he would have loved to receive more but believed the $5.85 was a “good and honest price.”
“Everyone else has a better price until you start pulling the numbers apart and then they are very close,” Mr Glennen said.
He expected prices would get to $6 by the end of the season.
Bonlac Supply Company chairman Tony Marwood, who represents Fonterra suppliers, said Fonterra’s opening price this season was 55c kgms above that of last year and reflected positive developments in the global dairy market.
“Hopefully we get to $6.20. That is a reasonable end of year price.
“$6.20 and a good season will be OK,” Mr Marwood said.
Fonterra said its closing milk price for the current 2017-2018 milk season was likely to be $6.08 kgms, comprising the step-up price to $5.68 kgms, plus 40c kgms loyalty payment.
Fonterra Australia managing director René Dedoncker said its opening price and upgraded forecast closing range were based “on a continued positive global supply and demand outlook, coupled with more favourable currency movements.
“Demand is expected to remain strong – especially from China for milk powders and Japan for cheese, as well as butter and AMF globally – and the global dairy market’s current strong prices are expected to continue throughout the new season.
“Since our last price review, we have achieved positive sales in key cheese export markets, global dairy trade remains at supportive levels, and the short-term weakness in the Australian dollar has given us confidence to update our forecast closing range,” Mr Dedoncker said.
He said Fonterra was confident in the long-term fundamentals of Australian dairy and was committed to paying its farmers a sustainable farmgate milk price.
By: Everard Himmelreich
Source: The Standard