Canterbury dairy company Synlait has revised its forecast base milk price for the 2018/2019 season upward, citing the steady improvement in dairy commodity prices.
The farmgate price has increased from $6.25 kgMS to $6.40 kgMS, while the forecast for the upcoming 2019/2020 season is a healthy $7.00 kgMS.
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In January it announced it would revise down its milk price forecast for the 2018/2019 season to $6.25 kgMS due to decreasing dairy commodity prices.
Synlait CEO, Leon Clement said the increase to $6.40 kgMS for this season was due to recovering dairy commodity prices since the January update.
"We've seen steady improvements in prices since the start of December, recovering a lot of the ground lost earlier in the season," he said.
Synlait was positive about pricing for the 2019/2020 season but Clement acknowledged the $7.00 kgMS relied on pricing remaining robust throughout the season.
"We think that's realistic in the light of the current slowdown in world supply and strong demand from our key markets."
He said while the forecasts are based on the best information available, farmers should remain cautious in the face of geopolitical and economic uncertainties.
"We will continue to assess movements to ensure our dairy farmers are kept up to date."
Synlait's final milk price for the 2018 / 2019 season will be confirmed alongside the annual result announcement in early September 2019.
The forecast for the 2019/2020 season would also be updated at that time.