Following a 15% lift in the GDT auction result last week, the largest dairy processor in New Zealand, Fonterra, has lifted its milk price forecast.
The midpoint in the forecast range is now $7.60/kg milk solids (31.5 c/l) up from a mid-point of $7.20 (30 c/l). The GDT auction increase was the latest of eight consecutive increases in results.
Fonterra farmers are coming to the end of the milk production season and closer to final payout.
Fonterra CEO Miles Hurrell says the lift in the 2020/21 forecast farmgate milk price range is a result of consistent strong demand from China and southeast Asia.
Fonterra also started linking milk price to sustainability targets.
It plans to reallocate money from farmers who don’t step up on sustainability.
Up to 10c/kg of milk solids of a farmer’s annual milk price (less than 0.5c/l in Irish terms) will be dependent on meeting sustainability criteria from June 2021.