Otago Dairy Farmers Welcome Record Milk Price Forecast
Source: DairyNews.today
Otago dairy farmers are optimistic as milk prices climb into record territory, with Fonterra raising its forecast to a midpoint of $10 per kilogram of milksolids for the 2024/25 season. The upd ated forecast, which now ranges from $9.50 to $10.50 per kilogram, reflects robust global demand and could surpass the previous high of $9.30/kg se t in the 2021-22 season.
Industry-Wide Optimism
The forecast aligns with Synlait’s projection of $9.50/kg and follows Westland Milk Products’ announcement of a 10-cent premium above Fonterra’s payout for the next two seasons, suggesting $10.10/kg. Meanwhile, Miraka has indicated a midpoint of $9.60/kg. Other processors, including Waikato-based Tatua, Open Country, and Oceania Dairy, have yet to release their forecasts.
Fonterra’s Chief Executive Miles Hurrell attributed the price rise to a recovery in demand from China as domestic production stabilizes, coupled with strong demand across Southeast Asia. "Milk production in the U.S. and Europe remains constrained, while New Zealand’s output has increased in most regions," Hurrell said, noting the influence of geopolitical uncertainties on global supply dynamics.
Relief Amid Rising Costs
Federated Farmers Dairy North Otago President Myfanwy Alexander welcomed the record-high forecast, emphasizing the relief it brings amid rising input costs, particularly staffing expenses. “A higher payout provides a chance to pay down debt, invest in capital improvements, and get ahead financially,” she said, adding that the break-even point for many dairy farmers now exceeds $8/kg due to surging costs.
The optimism comes with caution, however. Alexander noted that record payouts often prompt local service providers to increase their prices, which rarely fall back when payouts decline. Still, she expressed hope for farmers to regain financial stability and address long-standing debts.
Regional Production Trends
Milk production across regions has shown strong performance, with North Otago achieving a 1.5% increase in daily milksolid output and Canterbury production up by 5%, with Mid Canterbury nearing 7%.
Fonterra’s optimism is echoed by broader industry trends. The recent GlobalDairyTrade auction recorded a 1.2% overall price increase, with whole milk powder rising 4.1% to $3,984 per tonne. This marks the third consecutive auction increase, even as some products, such as butter, saw price declines.
Global Perspective
Rabobank’s latest global dairy report anticipates rising milk prices and improved margins to drive increased supply across key export regions in 2025. Senior agricultural analyst Emma Higgins highlighted favorable feed prices and availability as contributors to improved dairy farm profitability, noting, “More money will likely mean more milk.”
Rabobank projects global milk supply growth of 0.8% in 2025, marking the first coordinated increase across major exporting regions, including New Zealand, since 2020. However, the bank expects global markets to absorb the additional supply without significant disruption.
The forecast aligns with Synlait’s projection of $9.50/kg and follows Westland Milk Products’ announcement of a 10-cent premium above Fonterra’s payout for the next two seasons, suggesting $10.10/kg. Meanwhile, Miraka has indicated a midpoint of $9.60/kg. Other processors, including Waikato-based Tatua, Open Country, and Oceania Dairy, have yet to release their forecasts.
Fonterra’s Chief Executive Miles Hurrell attributed the price rise to a recovery in demand from China as domestic production stabilizes, coupled with strong demand across Southeast Asia. "Milk production in the U.S. and Europe remains constrained, while New Zealand’s output has increased in most regions," Hurrell said, noting the influence of geopolitical uncertainties on global supply dynamics.
Relief Amid Rising Costs
Federated Farmers Dairy North Otago President Myfanwy Alexander welcomed the record-high forecast, emphasizing the relief it brings amid rising input costs, particularly staffing expenses. “A higher payout provides a chance to pay down debt, invest in capital improvements, and get ahead financially,” she said, adding that the break-even point for many dairy farmers now exceeds $8/kg due to surging costs.
The optimism comes with caution, however. Alexander noted that record payouts often prompt local service providers to increase their prices, which rarely fall back when payouts decline. Still, she expressed hope for farmers to regain financial stability and address long-standing debts.
Regional Production Trends
Milk production across regions has shown strong performance, with North Otago achieving a 1.5% increase in daily milksolid output and Canterbury production up by 5%, with Mid Canterbury nearing 7%.
Fonterra’s optimism is echoed by broader industry trends. The recent GlobalDairyTrade auction recorded a 1.2% overall price increase, with whole milk powder rising 4.1% to $3,984 per tonne. This marks the third consecutive auction increase, even as some products, such as butter, saw price declines.
Global Perspective
Rabobank’s latest global dairy report anticipates rising milk prices and improved margins to drive increased supply across key export regions in 2025. Senior agricultural analyst Emma Higgins highlighted favorable feed prices and availability as contributors to improved dairy farm profitability, noting, “More money will likely mean more milk.”
Rabobank projects global milk supply growth of 0.8% in 2025, marking the first coordinated increase across major exporting regions, including New Zealand, since 2020. However, the bank expects global markets to absorb the additional supply without significant disruption.
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