This brings the new season’s forecast to between $6.25 and $6.55/kg milk solids (29.94-31.38c/litre).

The company circulated a statement to its suppliers stating it had seen the market recover in the past few months, with stability returning as demand and supply came more into balance.

The statement went on to say “our expectation is that market balance will be maintained throughout the new season”.

Stable conditions

Chris Lewis, president of Federated Farmers and supplier, was surprised and delighted. He said: “It was a relief opening it and seeing a bit of sunshine on the horizon that we could have some stable conditions going forward. I think whether you are an OCD supplier or just a dairy farmer in general, when you read this forecast a lot of farmers will take comfort as things are going to go a little bit better.”

Nathan Penny, ASB Bank’s senior rural economist, said OCD’s midpoint forecast of $6.40 (30.66c/l) was within the ballpark of their expectations for next season. He also predicted that Fonterra would lift its forecast to $6.75/kg (32.34c/l).

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