Banks Raise Milk Price Forecasts Amid Global Supply Squeeze

The dairy giant recently revised its range to $7.75/kg-$9.25/kg of milksolids, up from its initial $7.25/kg-$8.75/kg forecast.

ANZ Leads the Pack
ANZ raised its milk price forecast to $9/kg, citing global milk supply shortages as a key driver. Agricultural economist Susan Kilsby noted that dairy commodity prices are trending upward as buyers recognize that there is unlikely to be a milk surplus this season.

Forecast Revisions from Other Banks
ASB raised its forecast from $8.35/kg to $8.60/kg.
Westpac now predicts $8.70/kg.
BNZ remains at $8.50/kg.

Rabobank increased its estimate to $8.60/kg, attributing the change to weak global milk supply and sustained demand.

Emma Higgins, a senior agricultural analyst at Rabobank, explained that global dairy markets are expected to remain stable in the near term, but factors like China's market rebalancing and the outcome of the U.S. election could affect trade dynamics.

Limited Growth in Milk Production
Milk production growth has been modest among the Big-7 dairy export regions (EU, U.S., New Zealand, Australia, Brazil, Argentina, and Uruguay). This limited supply growth has supported dairy commodity prices, translating into higher farmgate milk prices, with increases of at least 10% in the U.S., the Netherlands, and Ireland.

Fonterra and Synlait React
Fonterra CEO Miles Hurrell expressed optimism about the higher milk price forecast, citing recent improvements in Global Dairy Trade prices and the cooperative's strong balance sheet. Synlait also raised its forecast to $8.60/kg but remains cautious due to volatile global dairy commodity prices.

As the season progresses, both Fonterra and Synlait are focused on maintaining competitive milk prices and supporting their farmer suppliers amid fluctuating market conditions.