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Synlait lifts forecast milk price for 2018/19 season, upbeat about new season

Tuesday 28th May 2019

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Synlait Milk lifted its forecast milk price for the season that just ended on higher global dairy prices and is positive about the season starting in June.

The Rakaia-based milk producer raised its forecast base milk price for the 2018/2019 season to $6.40 per kilogram of milk solids from $6.25/kgMS. Its opening forecast for the 2019/2020 season is $7.00 kg/MS. 

"The increase to $6.40/kgMS for this season is due to recovering dairy commodity prices since our last update in January 2019,” said chief executive Leon Clement. 

While global dairy prices dipped in the latest auction, they have risen in the prior 11 auctions and average prices are more than 20 percent higher than they were in early December. 

“We’ve seen steady improvements in prices since the start of December, recovering a lot of the ground lost earlier in the season,” he said. 

While Synlait is upbeat about the new season, Clement said the $7.00/kgMS forecast relies on pricing remaining robust throughout the season. 

“We think that’s realistic in the light of the current slowdown in world supply and strong demand from our key markets,” Clement said. 

The move is in contrast to Fonterra Cooperative Group that last week narrowed the range for its forecast payout to farmers this season. The country's biggest dairy processor expects to pay $6.30-6.40/kgMS in the current season - which ends on May 31 - versus its February forecast of $6.30-6.60/kgMS. That decision reflected weaker than expected pricing for whole milk powder and skim milk powder, offset by a lower kiwi dollar.

Fonterra's opening forecast for the season beginning June 1 is $6.25-7.25/kgMS.

Synlait shares last traded at $9.16, and are up 1.8 percent so far this year. 

(BusinessDesk)

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