Fonterra Australia has announced an average farmgate opening milk price for 2019-20 of $6.60 a kilogram of milk solids.

The company also confirmed its current estimate of the final return for this season would remain at $6.05/kg MS.

Fonterra Australia managing director Rene Dedoncker said in a letter to suppliers today the majority of the dairy processors’s milk had been contracted and with lower volumes, there was “limited ability to capture the market upside for the remainder of the season”.

Mr Dedoncker said Fonterra had brought forward the timing of the new season’s opening milk price to enable farmers to make decisions on their farms.

He said it was a competitive milk price which also allowed the company to deliver a return on its business.

It came at a time when world prices had lifted substantially from the same period last year.

“The broader global supply and demand picture is positive, with demand expected to remain strong across key trading partners and a favourable exchange rate,” Mr Dedoncker said.

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