Fonterra has boosted its 2016/17 forecast farmgate milk price for New Zealand suppliers for the second time in a month on the back of rising confidence in global dairy prices.
The NZ company boosted the price it pays farmers by 50 cents to $NZ5.25 per kilogram of milk solids.
Fonterra's chairman John Wilson said that since the co-operative last reviewed its forecast Milk Price in August, global milk supply has continued to reduce and demand has remained stable.
“Milk production in key dairying regions globally is reducing in response to low milk prices. Milk production in the EU for 2016 is beginning to flatten out and our New Zealand milk collection is currently more than 3 per cent lower than last season,” Wilson said.
“While we have seen some improvement in GDT auction prices recently, the high NZD/USD exchange rate is offsetting some of these gains.
“There is still volatility in global dairy markets and we will continue to keep our forecast updated for our farmers over the coming months."
Last week, Murray Goulburn announced a rise of 15c per kilogram of milk solids (kg/ms) for FY17 for its Australian suppliers on the back of strengthening global trade.
Earlier this year, both companies dropped their Australia farmgate milk prices on the back of lower global demand, leaving farmers struggling to cover their costs.
