26 Jan 2021

High dairy prices push up Synlait payout forecast by 13%

1:21 pm on 26 January 2021

Speciality dairy company Synlait Milk is lifting its milk payout forecast by nearly 13 percent following strong world prices.

Brighter Future - Dairy. Dairy farming family the Mathieson's, Ewen, Dianne and Melissa talk about the boom and bust of their industry since 2008 and how they got through some of the tougher times.

Photo: RNZ / Rebekah Parsons-King

The company has increased its base milk price by 30 cents to $7.20 a kilo of milk solids from $6.40/kg.

Synlait national milk supply manager David Williams said dairy prices had risen strongly in recent months and were expected to stay around current levels for the rest of the season.

"Despite the wider global uncertainty, dairy commodity prices have remained robust and a higher forecast base milk price will be welcomed by our Synlait farmer suppliers."

The forecast is just below the $7.30/kg payout in 2018, and the third strongest since the record $8.31 in 2014.

Synlait mainly produces milk with the A2 protein which it turns into infant formula mostly for A2 Milk, although it has been expanding into consumer dairy products and owns a cheese company.

Last December, it warned it expected its profits to fall almost by half because of lower sales caused by a fall in A2 Milk sales.

However, more broadly prices at the fortnightly global dairy auctions have been rising since November last year and hit their highest level since May 2014 in last week's offering.

Whole milk powder prices, which are a key factor in farmers' payouts have been at their highest level in four years.

Dairy producer Fonterra has a forecast range of $6.70 to $7.30/kg.

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