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Opening milk prices out

Local player leads the charge

GEOFF ADAMS July 1, 2014 3:00am

Murray Goulburn and Fonterra have both announced opening milk prices for the next season, with the Victorian-based co-operative leading by about 20¢/kg milk solids.

Murray Goulburn will pay an average price of $6/kg milk solids which the company said was the highest milk price available to suppliers at the start of a financial year.

It is a seven per cent increase on last year’s opening price.

The company forecasts a full-year price of $6.15 to $6.30.

Fonterra announced its opening price last week for Victorian suppliers of about $5.80/kg and a closing range of between $6.10 and $6.30.

Murray Goulburn managing director Gary Helou said their forecast would be impacted by external factors such as fluctuating global markets and the Australian dollar.

‘‘MG’s opening price reflects the positive impact of improvements achieved through our ongoing focus on operational excellence and innovation; softening global dairy prices, albeit from a base of continued strong demand for Australian dairy foods; and a recently steady Australian dollar,’’ he said.

Mr Helou has told suppliers that given the potential changes to MG’s capital structure there would not be an option to increase the rate of share offtake above 0.65¢/litre in 2014-15.

Last year’s opening price was $5.60.

Mr Helou said they had seen dairy ingredients prices soften in recent months as key exporting regions increased milk production.

‘‘Consequently the full-year forecast is down on last year.

‘‘As reported at recent supplier meetings, demand for dairy food remains strong in key markets.

‘‘However over the past year key exporting regions, including New Zealand and the European Union, have seen better seasonal conditions compared to last year,’’ Mr Helou said.

Fonterra Australia managing director Judith Swales said market factors would continue to impact prices through the 2014-15 season.

‘‘The global environment remains volatile and is evolving rapidly,’’ Ms Swales said.

‘‘We have recently seen global commodity prices decrease due to increased global production and our currency has appreciated. But, demand from key importing countries remains strong.’’

Bonlac Supply Company chairman Tony Marwood said it was great to see Fonterra Australia open with a strong price again this year.

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