SAPUTO today has announced an opening farmgate milk price of $5.75 a kilogram of milk solids for the season starting July 1.

The price if for Warrnambool Cheese and Butter suppliers as well as those who formerly supplied Murray Goulburn. MG was purchased by Saputo earlier this year for $1.3 billion.

The lack of an opening price has frustrating suppliers, with Fonterra Australia – the second largest processor – still without an opening price, despite providing a large forecast close of 70 cents a kilogram of milk solids last month.

“The opening price represents our current assessment of expected market conditions for the coming year,” the Saputo Dairy Australia supplier letter signed by Kai Bockmann, the Saputo Inc and Dairy Division (Australia) president and chief operating officer, said.

“We believe it is responsible and allows room for upward movements if improved market conditions are realised throughout the year. We are pleased to report that export market conditions have continued to improve in recent months. Our closing average price in the coming season remains dependant on the many external factors that impact our returns. We will monitor market conditions as the season unfolds and update you as part of our quarterly milk price review process in October, January, April and June.”

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

The report shows milk supply growth out of Europe and the US is failing to meet market expectations, with global farmgate milk prices to move off the lows posted at the start of the year.

It is expected milk prices will move seasonally higher through the second half of 2018.

Rabobank senior dairy analyst Michael Harvey said the rally in global commodity prices, unfavourable weather out of the United States and the EU, and expectations for the Australian dollar to ease fed into Rabobank’s revision of the full-year forecast of $6.40/kgMS.

He said recent milk pricing announcements will see the price cycle turn in most key export regions.
“While this will trigger a supply response, this response is likely to take time and be curbed somewhat by the pressure of rising feed costs on farm margins.”

Article sourced from www.weeklytimesnow.com.au