6 Sep 2017

Dairy payouts could rise further to $7 - ASB

2:33 pm on 6 September 2017

There is a good chance dairy price forecasts could reach $7kg of milk solids before Christmas, ASB says.

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Photo: 123RF

Global dairy prices have risen by 0.3 percent to $US3323 a tonne in the global dairy auction overnight.

The price of whole-milk powder, which is key to Fonterra's payout, fell by 1.6 percent to $US3100 a tonne, while volumes sold are up 3.8 percent.

Butter prices rose to their second-highest level of $US5954 a tonne.

ASB Rural Economist Nathan Penny said there was potential for prices to break their holding pattern and push higher over coming months.

"As milk fat demand lifts we're likely to see that take other products, like whole milk powder, higher as well.

"As a result we can see some upside risk to our milk price forecast of $6.75 per kilogram of milk solids - there's a good chance now we might see something $7 or above this season."

Weather was a key factor in the lift, Mr Penny said.

"It's been very, very wet - pretty much all year. If that continues, production is likely to be weaker over the peak spring period.

"If that does eventuate we'd like to see prices go higher in the next month or two, so before Christmas we'll get a readout on that."

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