Saputo Dairy Australia said that its opening weighted average milk price will for the 2020/21 season would be $6.40 per kilogram milk solids for its suppliers in the southern milk region.

Bega also announced its opening milk price for southern Victoria was $6.40 per kg milk solids.

Fonterra Australia announced its weighted average farmgate milk price for the season of $6.06 per kg milk solids, with an estimated closing price range of $6.30 to $6.70.

Saputo's said that in addition to the minimum prices in the milk supply agreement, Saputo would continue additional payments to suppliers, including the monthly milk quality bonus, productivity payment and off-peak payment.

"While the code allows prospective step-downs in limited circumstances, Saputo Dairy Australia has again committed to no price step-downs in any circumstances during the year, which honours our ongoing promise to suppliers," it said.

"Determining the outlook for milk prices for the 2020/21 milk year has been particularly challenging.

"Heightened uncertainty and rapidly-changing conditions arising from COVID-19 will continue to impact world economies and the dairy market for the coming milk year.

"Despite this, SDA's objectives remain the same. We are well placed, with our diverse product mix and markets, to adjust to evolving market conditions and continue maximising the value of every litre of milk."

Fonterra Australia Managing Director René Dedoncker said that Fonterra's prices considered all factors including the uncertain market conditions caused by COVID-19.

"Global commodity prices have softened and are back to early 2019 levels with GDT average prices between $2800 and $3000 USD a tonne," Mr Dedoncker said.

"After considerable volatility, the Australian dollar has stabilised between US$0.64 and US$0.66 and we have based our pricing on this range.

"The impact of COVID-19 on economies and the market is still largely unknown and we are seeing softening of demand relative to supply which is putting downward pressure on prices.

"We anticipate that global dairy markets will be uncertain for some time. The global downturn is continuing to reduce consumers' purchasing power while the food service industry remains impacted by restrictions in the tourism and the hospitality sectors.

Mr Dedoncker said the last month had given some cause for optimism in the year ahead, with improvements in key product values.

"By the end of June, we'll have more certainty on our next six-monthly product pricing, including key cheese export contracts," he said.

"We will provide our farmers with an update on this by the end of June, including any resulting impact on our price forecast.

"Fonterra's market-leading consumer brands and value-added ingredients portfolio are providing strong options to put milk into," Mr Dedoncker.

"Like our suppliers, we will be head down, doing the basics well and focusing on costs to secure the best margins."

Our COVID-19 news articles relating to public health and safety are free for anyone to access. However, we depend on subscription revenue to support our journalism. If you are able, please subscribe here. If you are already a subscriber, thank you for your support.