FONTERRA has announced an opening price of $5.85 a kilogram of milk solids for next season.

The New Zealand dairy giant has also forecast a close of $6.20/kg MS for the season starting July 1.

Fonterra Australia managing director René Dedoncker said the price reflected what the company can earn in the market.

“Our opening and upgraded forecast closing range are 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,” he said.

“Since our last price review, we have achieved positive sales in key cheese export markets, GDT remains at supportive levels, and the short-term weakness in the Australian dollar has given us confidence to update our forecast closing range.

“This is a market-based and sustainable price, and is another step towards pricing simplicity — which is what the industry is calling for.

“In line with our commitment to give farmers earlier pricing signals to assist them in planning ahead, we again provided a forecast closing range in May, we have continued to offer Fixed Base Milk Price, and we provide regular market information in our Global Dairy Update Australia,” Mr Dedoncker said.

In May Fonterra told suppliers its forecast closing range was $5.50-$6.20/kg MS.

This was critised by suppliers and the industry as being vague and too difficult to budget on.

Fonterra also announced a step-up to this season’s farmgate milk price to 5.68/kg MS. With the 40c/kg MS incentive it added to the farmgate milk price for this season it pushes the 2017-18 price to $6.08/kg MS. This step-up will be paid on July 15.

The long-awaited opening price comes just 10 days before the beginning of the new season and two days after Australia’s largest milk processor Saputo released an opening farmgate milk price of $5.75/kg MS.

Dairy farm leaders cautiously welcomed the $5.75/kg MS on Tuesday, happy to finally have a farmgate milk price with the delay frustrating dairy farmers trying to budget with rising feed costs.

But since, many dairy farmers have expressed their frustration to The Weekly Times with the price they say does not reflect the global market.

The Saputo price is for Warrnambool Cheese and Butter suppliers as well as those who formerly supplied Murray Goulburn.

Southern Australia’s farmgate milk commodity price is set to reach $6.40/kg MS for 2018-19, according to Rabobank’s latest dairy quarterly report.

Article sourced from www.weeklytimesnow.com.au