Synlait lifts forecast payout

AUCKLAND: Synlait Milk raised its forecast payout to farmers, saying it expects global dairy prices to stay strong for the rest of the season.

The milk processor raised its forecast farmgate payment by 25c to a base price of $7.25 per kilogram of milk solids.

That would be the highest payout since the 2014 season and is up from $6.58/kgMS last season — comprising a $6.40/kgMS base price and average incentive payments of 18c/kgMS.

Chief executive Leon

Clement said the company expects global prices to remain around current levels for the rest of the season.

The average whole milk powder price rose 2.4% to $US3233 ($NZ4915) per tonne at last week's Global Dairy Trade auction.

``Synlait increased its forecast milk price to $7.25 for the current season on the back of higher than expected commodity prices at the end of 2019, which we believe will hold in the medium term as supply and demand continue to be evenly matched,'' Mr Clement said in a statement.

The new forecast is just below the $7.30 midpoint of Fonterra Cooperative's $7to$7.60/kgMS forecast. The country's biggest milk processor has cited strong global demand and constrained supply for its outlook.

Westpac economists last week raised their forecast payout to $7.40/kgMS, and noted the risk that dry weather was restricting global milk supply, which could push prices higher in the shortterm.

Synlait's contracted milk supply in the July 2019 year rose 0.9% to 64.2 million kgMS, and it bought an extra

1.9 million kgMS at the edges of the milk season. — BusinessDesk