Synlait chief executive John Penno said the company was ”feeling positive” about the market, which was reflected in the new forecast milk price.
”We start the season with some confidence that supply and demand are more balanced, and this forecast reflects an expectation of dairy prices remaining at current levels,” Dr Penno said.
Following two seasons of losses for many dairy farmers, break-even for most is considered around the $5.05 mark.
Separately, Synlait also announced yesterday it had bought 100% of Auckland-based The New Zealand Dairy Company, a blending and canning site in Mangere which is still under construction.
The investment includes a payment of $33.2million on acquisition. Synlait expects to spend a total of $56.5million once the plant is commissioned and opened in October this year.
The deal includes the land and buildings the Dairy Company is on.
Dr Penno said the Mangere plant would be to the same scale, standard, equipment and build-specifications as its Dunsandel plant in Canterbury.
”The production line will be very similar to the blending and canning plant already in operation at Synlait’s Dunsandel site,” Dr Penno said.
Fonterra last week bumped up its current 2016-17 season payout forecast by 15c to $6.15, meaning the average dairy farm would be $23,000 better off.
Synlait in early-February raised its current season payout forecast from $6 to $6.25.
Yesterday Mr Penno said Synlait would update the market in mid-June on its 2016-17 price and announce its final milk price for the season in late September.
Farm-gate milk prices have been extremely volatile in recent years, hitting a record high of $8.40 in 2013-14 and dropping to $4.40 in 2014-15, before falling further to $3.90 in 2015-16.
By: Simon Hartley
Source: Otago Daily Times