Tuesday 28 June 2016 12:34 PM
Murray Goulburn announces 2017 farmgate milk price, sees only 'modest' recovery
By Tina Morrison
June 28 (BusinessDesk) - Murray Goulburn Cooperative, Australia's dominant milk processor, announced its forecast
farmgate milk price for the coming year, saying it expects only a modest recovery in prices in the second half of the
year.
The company forecast a farmgate milk price of A$4.80 per kilogram of milk solids for the season ending June 30, 2017,
compared with an expected payment of between A$4.75 to A$5.00 in the current year. It announced a 2017 net opening
farmgate milk price of A$4.31/kgMS after repayment of a 14 Australian cents/kgMS milk supply support package.
Dairy companies are cutting payments to their farmer suppliers as they grapple with weak dairy prices which have
remained lower for longer than expected as global supply continues to exceed demand. Murray Goulburn said today that
global conditions haven't yet improved.
"In the face of these difficult market conditions, the forecast FY17 FMP reflects MG's view that commodity prices will
continue to trade around current levels for the remainder of the 2016 calendar year with only a modest recovery in price
of around 6 percent across MG's major commodities during the second half of FY17," interim chief executive David
Mallinson said in a statement. "This prolonged environment of lower prices means MG expects to achieve lower average
selling prices for commodities throughout FY17 when compared with FY16.
"We acknowledge FY17 will be a challenging year for our suppliers," he said.
To help cope with the lower prices, Murray Goulburn is looking to make its business more efficient by reducing costs and
working capital levels, he said.
Australia's Bega Cheese last week released an opening farmgate milk price for the 2016/17 season of A$5/kgMS, saying
analysts aren't expecting an improvement in dairy commodity returns until the first half of next year. Fonterra
Cooperative Group, which is obliged to at least match Murray Goulburn’s price under its Bonlac supply agreement, is yet
to release its forecast for the new season in Australia.
Units in the MG Trust last traded at A$1.135 and have shed 54 percent this year.
(BusinessDesk)
ENDS