Murray Goulburn will open the new season at $4.70/kg milk solids with a forecast closing price of between $5.20kg and $5.40/kg MS.
The co-op made the announcement on Tuesday morning and said the final forecast is subject to various assumptions, including “dairy commodity prices, exchange rates and achieving cost out initiatives, as well as achieving milk intake of approximately 2.5 billion litres”.
MG Chief Executive Officer, Ari Mervis, said that in setting the forecast, the co-op had taken a “prudent view on key assumptions for commodity prices”.
“Although global commodity prices have shown some recovery since this time last year, whole milk powder and particularly skim milk powder prices remain under 10 year averages,” he said in the letter to suppliers.
“This has been somewhat offset by firmer butter and cheddar prices. We have also had regard to Global Dairy Trade auction results over the past two months and current futures pricing, both of which suggest some ongoing price volatility in global markets.”
Mr Mervis said while the opening and forecast prices were an improvement on the current season, Murray Goulburn’s performance remains below his expectations.
He said the co-op has begun a comprehensive strategic review which will look at all aspects of MG’s strategy and corporate structure, including the Profit Sharing Mechanism and capital structure.
“I see this review as a fundamental next step to strengthen MG for the future,” he said in the letter to suppliers.
“While the previous decisions resulting from the manufacturing footprint review, including the announcement of three site closures were necessary, I do not consider them alone to be sufficient to move the business forward.
“Given the timeframes associated with the site closures, the expected financial benefits are not expected to be fully realised by MG until FY19.
“A further update on the strategic review is expected to be provided at the time of MG’s full year results in August.”