Milk prices not unexpected


Milk prices not unexpected

Dairy downturn: opening milk prices are low but not a surprise.

MILK prices for the new season have opened up to 8.5 per lower on last year’s price.

Murray Goulburn, Burra Foods and United Dairy Power announced their prices in the last week.

Murray Goulburn Co-operative told suppliers the opening farmgate price of $4.50 per kg milk solids was 8.5 per cent down on last year’s opening price of $4.92.

Max Jelbart, president of the South Gippsland branchy of the United Dairyfarmers of Victoria, was prepared for the announcement.

“There had been plenty of comment around the opening price and it may have even opened a few cents higher than people thought,” the Leongatha South farmer said.

“It is still going to put a lot of pressure on a lot of farms. There might be some upward movement throughout the year, but not a lot.

“What was interesting though, is that no other company released their opening price until Murray Goulburn did.”

Mr Jelbart said while farmers are always trying to optimise their milk production, it will prove difficult in South Gippsland’s wet conditions.

“At the end of the day, the more milk that goes through Murray Goulburn, the better the price will be; it will determine the milk price for everyone,’ he said.

“We will continue to optimise our position and look it as we go along. We have plenty of cows to calve in the winter. If it dries up, it will also influence what we are going to do.”

External influences will continue to impact on the region’s dairy farmers throughout the coming season.

“There has been a bit of an increase in grain prices over the past few months, which has influenced how much grain farmers can buy in,” Mr Jelbart said.

“If the dollar was at 80 to 85 cents, it would have a huge impact on the milk price, but it’s not there so we have to deal with reality. The Euro has become weaker as well, so any imports out of Europe will be more competitive.”

Murray Goulburn managing director Gary Helou said the price was influenced by recent significant falls in world dairy prices caused by increased milk production in key dairy export countries, as well as the high Australian dollar.

“Our forecast end-of-season milk price for the coming year is a range of $4.70 to $4.90 per kg milk solids,” he said.

“Our market forecast includes the contribution from the $100 million in savings that we have committed to remove from our cost base.

“We are forecasting to continue to increase our milk collections in the coming year which will grow markets, revenues and improve asset utilisation.”

Mr Helou said that despite the recent market weakness caused by increased milk supply, international dairy demand remained strong.

“Milk supply to Murray Goulburn increased by approximately four per cent in 2011-12 and we are actively seeking more milk from our current supply base and new suppliers.

“During the season, if market conditions allow, Murray Goulburn will pass on ‘step-ups’ to all supplier/shareholders supplying us at that time.”

Burra Foods’ price equated to a weighted average available price of $4.55 per kg milk solids for the 2012-2013 season.

Grant Crothers, chief executive officer, said: “This price is above the opening price range recently provided by Dairy Australia, and our closing price outlook is also higher at $4.80 to $5.00 kg of milk solids.”

Burra Foods expects to receive more than 275 million litres at the Korumburra site next season.

United Dairy Power’s average opening price will be between $4.88 and $5.19 kg milk solids depending upon production curve.

UDP collects milk from Gippsland, northern Victoria, southern NSW, western Victoria and more recently commenced recruiting suppliers in South Australia.



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Posted by on Jul 3 2012. Filed under News, Rural News. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

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