Opening season hopes rise

WITH current milk prices at relatively high levels and the end of the season fast approaching, speculation regarding the new season opening milk price has begun.
Burra Foods general manager (commercial) Dale O’Neill, said current milk intake is in line with earlier forecasts and when compared to last year, volumes are up considerably, particularly in May and June.
“Despite softer market conditions in recent months, ability to capture the stronger market returns earlier in the season is underpinning the higher farm gate returns for all of our farm milk supply partners for the remainder of this season,” he said.
“While maximising cash flow during the spring months is important when determining our opening price, our primary objective remains to pay higher farm gate prices for all farm milk supply partners.”
Mr O’Neill said Burra Foods would announce its opening milk price before the start of the next season once the company has the best information available.
“Our expectation at this stage is for next season’s opening price to be in line with or above the opening price this season,” he said.
“The market experienced unprecedented price movements across the main dairy commodities last year.
“While demand for dairy continues to remain firm, the increase in supply from key exporting regions indicates that commodity markets will trade at lower levels in 2014.”
Fonterra Australia director of operations and ingredients Bruce Donnison said the company was currently developing budget and plans for next season, and would announce an opening milk price in the near future.
“Milk price is largely a function of global supply and demand, and we continue to analyse international dairy commodity prices, as well as business factors, as we develop our pricing,” he said.
“Recent months have seen a decline in international dairy markets, largely due to increasing supply.
“We do foresee continued volatility as increased production continues to come on to the market – especially from the EU and US – but demand remains strong from key importing countries.”
Mr Donnison said the impact of these factors on price would continue to unfold throughout next season.
“We remain confident that Fonterra will continue to lead on milk price next season, in addition to offering leading support services for our suppliers’ profitability and growth plans,” he said.
While an El Nino is expected to impact Gippsland in the latter half of winter, Mr O’Neill doesn’t expect it would impact on milk supply.
“Generally, a milder winter period can be of benefit to milk production in Gippsland.  What is key however, is the spring period and the impact on pasture growth across the peak of the season,” he said.
Mr Donnison said Fonterra Australia had seen a recent rise in milk intake due to the unseasonably warm weather.
“We have also been encouraged by recently weakening El Nino indicators but if an El Nino does occur next season that could have a potential impact on supply locally,” he said.
Murray Goulburn was contacted for comment but did not respond.

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Posted by Sarah Vella on Jun 24 2014. Filed under 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