SOUTH Australian Dairyfarmers Association president John Hunt has welcomed an upward swing in opening farmgate milk prices this season.
Canadian dairy giant Saputo – which purchased Murray Goulburn earlier this year for $1.3b – announced this week an opening price of $5.75 per kilogram of milk solids for the season starting July 1.
Saputo announced the opening price for all its suppliers in the southern milk region based on an “assessment of expected market conditions” for the coming year.
The processor claimed the opening price allowed for upward movement if “improved market conditions are realised” during the season.
Saputo has revealed it is focused on building milk supply in Victoria and Tasmania as a priority.
“It’s a good start and it is a more positive story than it has been for the last few years,” Mr Hunt told The Border Watch yesterday.
“As long as they follow the market signals it seems promising – at the moment the market signals are closer to $6.30 or $6.40.
“Fonterra announced a starting price of $5.85 this week, which is better.”
With milk prices expected to move seasonally higher through the second half of the year, the New Zealand processor forecast a closing price of $6.20 per kilogram of milk solids for the season.
Mr Hunt said both opening prices were reasonable given milk payments plummeted below the cost of production for many local suppliers last year.
“Certainly for the last few seasons many farmers have been living with overdrafts,” Mr Hunt said.
“Any profit will help fill some of those holes.”
