Fonterra will pay an “additional” monthly payment of 40c/kg milk solids on top of a forecast 2017/18 milk price of $5.30-$5.70kg/MS in a bid to retain milk supply.
The co-op also advises that its forecast final milk price for the financial year has been maintained at a range of $5.30 to $5.50 per/kg of milksolids.
The is follows price rises by Fonterra of 13c/kg milksolids (8c/kg fat, 20c/kg protein) backdated to July 1 – lifting its average annual price to $5/kg for milksolids.
Longwarry Food Park also recently lifted its prices by 7c/kg for fat and 17c/kg for protein, backdated to January 1. Its average price for the year is now $5.08kg/milksolids.
Murray Goulburn managing director Stephen O’Rourke says the co-op is increasingly confident of delivering at the upper end of its price target.
“The international market for key dairy products – such as whole milkpowder, cheese and butter – has remained firm during the first half of FY11, based on very strong demand from MG’s long-term customer base.
“The indications are that the market will remain solid this financial year.”
Fonterra’s national milk services manager Heather Stacy says its increase reflects conditions in global dairy commodity markets, where prices have held and then strengthened during December and January.
“Whole milkpowder is now trading above US$3700 per tonne internationally and, despite the challenges created by the strong Australian dollar, we are pleased to be able to pass through the benefit of higher prices to our suppliers,” Stacy says.
Fonterra suppliers are on track for a milk price this season that is one of the highest on record.
“We remain determined to reflect any further significant improvement in market conditions in our farmgate prices,” Stacy says. “One important constraint on the returns being generated by international dairy prices is the fact the Australian dollar continues to trade at or above parity with the United States currency.”
LFP also says its increase is a result of improvements in commodity prices – balanced with the strength of the Australian Dollar during past months.
“We have seen some stability in the market place with good demand for our products, giving us confidence in further step-ups to be announced in coming months,” the company says.
“Our Longwarry Plant has performed well during spring with increased milk flow benefitted by an expansion in our supplier base and improved seasonal conditions.”
Strong international demand was reflected in the opening globalDairyTrade auction at the start of the month. All products rose 7.2% to reach the highest level since the online auctions began in July, 2008.
Prices for whole milkpowder rose 5.7% to $US3995 a tonne, skim milkpowder rose 8.5% to $US3913 and anhydrous milkfat rose 9.2% to $US6486.