The country’s second biggest milk processor, Open Country Dairy, has lifted its full year average milk price forecast in line with the brighter global market outlook for dairy products. By Andrea Fox.
The company has told its farmer-suppliers the full year forecast is now $5.60-$5.90/kg milksolids, up from a range of $4.25-$4.45 in July.
The increase means farmers providing milk between last month and January, known as settlement period two, will be paid $6.10-$6.30/kg in full in March next year, while the payment for milk provided between February and May next year, settlement period three, will earn $7-$7.30, to be paid in full in August.
Open Country has also increased its November to January advance rate to $4.70, and the February and March advance rate to $4.25. The April and May advance rate has been lifted to $4.
The privately-owned company told its suppliers that improving market conditions in the past month indicated a relatively stable outlook for the global dairy market for the rest of this dairy season. An improvement in the exchange rate had also boosted confidence in the outlook.
“The main catalyst has been the tightening of global milk supply in most export countries which has also been supported by steady demand,” the company said in an email to suppliers.
But it was watching “with caution” the potential impact of the European Commission’s announcement that it would release intervention stock into the market from this month.
“The key point will be whether increased pricing will trigger a supply response in the EU in the New Year and dampen the long term outlook.”