FONTERRA Australia has today announced an opening farmgate milk price of $4.75 a kilogram of milk solids for its 2016-17 season.
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Fonterra’s chief operating officer of velocity and innovation, Judith Swales, said it was a “responsible” opening price, reflecting market conditions.
“Our forecast is based on the Australian dollar holding at around 74 cents to the US dollar and reflects the revenue we expect to earn on products produced using our manufacturing assets,” she said.
“Our farmgate milk price in Australia is also impacted by global dairy markets given our mix of domestic and export sales.
“While we are still seeing an imbalance between global milk supply and demand there are signs in key milk producing areas of a slowdown in production and increased imports into key markets such as China, Asia and Latin America.
“This supports our view of a recovery in global prices as we move through the season.”
Ms Swales said individual suppliers’ milk prices could vary across Fonterra’s supply regions, depending on the individual farm’s milk profile, regional production factors, milk quality and farm management systems.
The company forecasts its average closing milk price for the season will hit $5kg/MS.