Southern dairy farmers are marvelling at the trajectory of a milk price entering record territory at $10 a kilogram of milksolids.
Fonterra’s 50c increase last week for a new forecast range of $9.50/kg-$10.50/kg puts the midpoint at $10/kg to lift spirits for the 2024-25 season.
That’s on the way to easily eclipsing the highest end of season result of $9.30/kg set in 2021-22, should there be no deviation for the rest of the season.
The co-op pointed to the ongoing strength of the global market for the rise.
At this stage, Fonterra’s $10/kg midpoint lines up with forecasts of $9.50/kg by Canterbury-based Synlait, while Westland Milk Products is on the record as paying suppliers a 10c premium above Fonterra’s payout the next two seasons — so $10.10/kg — and this week Taupo-based Miraka flagged a $9.60/kg midpoint.
High paying Tatua from Waikato and other processors such as Open Country and Oceania Dairy have yet to show their hand.
Federated Farmers Dairy North Otago president Myfanwy Alexander said the payout lift was welcome news.
"It’s no secret that input costs have been rising very heavily over the past few years, especially costs such as staffing which are spiralling out of hand, and so a little bit more fat in the system will be fantastic.
"It will be great to pay down some debt and a real chance to get some capital work done on farms and just start to get ahead a little bit. It will also be a welcome boost for those areas in the country like down South, where things have been pretty average."
She said the break-even point would be more than $8/kg for most dairy farmers so the buffer would be well received.
"Record levels always get everyone excited, but then you have to remember record costs as well and the break-even has jumped $2/kg in the last few years, so we need that record payout."
Miss Alexander said farmers would be wary of local services upping their prices during a record payout.
Fonterra said the recovery of greater China demand as domestic milk production rebalanced had combined with strong demand from Southeast Asia.
