Synlait drops base milk price forecast to $6.15

John Penno
John Penno

Synlait Milk has dropped its forecast base milk price by 10c, citing a ``significant drop'' in the dairy market.

It was now forecasting a total milk price of $6.29 for the 2016-17 season, consisting of a forecast base milk price of $6.15 and 14c in premium payments.

The Mid Canterbury processor had been signalling to its suppliers that the previous $6.25 forecast, announced in February, was under pressure due to a rapid market downturn, managing director John Penno said.

``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 $6.25kg ms forecast,'' he said in a statement.

That price was a forecast and, while things could change, the company communicated regularly with its suppliers so they were not taken by surprise. Many would have expected the update, he said.

Synlait's final milk price for the 2016-17 season would be confirmed in late September.

The latest Situation and Outlook for Primary Industries report said New Zealand's all-company average farm gate milk solids price forecast for the season ending May 2017 had increased to $6.61 (including dividends where applicable), up from a $6.41 forecast three months ago.

The report forecast the milk solids price to rise to $7.29kg by 2021, but northern hemisphere supply responses to rising dairy prices, and potential shifts in Asian demand, could put downward pressure on that forecast.

A note from ASB yesterday said prices were expected to track sideways at this week's GlobalDairyTrade auction.

Prices were also largely flat at the last auction a fortnight ago, except for whole milk powder, which fell 2.9%.


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