Synlait Milk lowers forecast payout for 2016-17 season after fall in dairy prices

Friday 16th June 2017

Synlait Milk, the NZX-listed dairy company, lowered its forecast payout for its farmer suppliers the season that just ended following what it termed a "significant drop in the dairy market."

The dairy company said its forecast base milk price is now $6.15 per kilogram of milk solids for the 2016-17 season versus a prior base milk price of $6.25 per kilo of milk solids. The season runs from June 1 to May 31. However, it will also pay a 14 cent premium payment for milk suppliers that provide milk for its special milk programs such as a2 milk and others. The premium was 11 cents in the prior season.

Chief executive John Penno said they had been signalling that the $6.25 forecast was under pressure due to the recent “rapid market downturn.” While global dairy prices have recovered on increased demand and waning supply they did fall in late February and early March.

“Gradual price improvements at the end of the season have made up some of the losses taken in March, but those improvements have been too late in the season to maintain the $6.25 kgMS forecast,” he said.

The final price for the 2016-17 season will be confirmed in late September.

There was no change to its forecast for the 2017-18 season it gave in late May when it said it expects to pay $6.50 kgMS, in response to increasing confidence that dairy commodity prices are now stabilising.

(BusinessDesk)

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