The GlobalDairyTrade price index increased by 1.7% in this morning’s auction.
That was less than analysts and expected and whole milk was down .2%.
However, Fonterra is obviously confident that the upward trend in prices will continue and has increased its farm gate forecast milk price:
Fonterra Co-operative Group Limited today 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 that 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 3 per cent lower than last season.
“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,” said Mr Wilson.
It’s only a forecast.
Farmers and sharemilkers will still be very cautious but it’s very welcome news for the industry, those who service and supply it and the wider economy.