UPDATE 3.45pm: New Zealand farmers have received a step up to their farmgate milk price.
The Standard wishes to clarify a previous report relating to a forecast milk price increase for Fonterra suppliers.
The earlier report was, in fact, specifically for New Zealand suppliers.
While the production and marketing of Fonterra’s dairy may differ “across the ditch”, industry leaders say it’s a step in the right direction.
United Dairyfarmers of Victoria president Adam Jenkins said the NZ price increase could bode well for the Australian market.
“Hopefully we’ve reached the bottom of the bucket and things are starting to go in the right direction,” he said.
The announcement was made one day before the company’s financial results are due for release in Australia.
Dairy Australia managing director Ian Halliday said it was another indication for a positive season, adding to Murray Goulburn’s step up and pending support-package review, the recent rainfall and price rises in the Global Dairy Trade Auction.
“We’re not out of the woods yet,” he said. "But it’s a start.”
The Standard apologies for the confusion.
EARLIER: Fonterra Co-operative Group Limited has increased its 2016-17 forecast farmgate milk price by 50 cents to $5.25 per kgMS.
When combined with the forecast earnings per share range for the 2017 financial year of 50 to 60 cents, the total payout available to farmers in the current season is forecast to be $5.75 to $5.85 before retentions.
Chairman John Wilson said since the co-operative last reviewed its forecast milk price in August, global milk supply has continued to reduce and demand has remained stable.
“Milk production in key dairying regions globally is reducing in response to low milk prices. Milk production in the EU for 2016 is beginning to flatten out and our New Zealand milk collection is currently more than three per cent lower than last season,” Mr Wilson said.
“While we have seen some improvement in GDT auction prices recently, the high NZD/USD exchange rate is offsetting some of these gains.
“There is still volatility in global dairy markets and we will continue to keep our forecast updated for our farmers over the coming months.”
More to come.