New Zealand's Synlait raises milk price forecast on strong US dollar

The forecast price was raised from NZ$9.00 to NZ$9.50/kg
calendar icon 6 July 2022
clock icon 2 minute read

New Zealand's Synlait Milk on Wednesday raised its forecast payout to farmers for the upcoming season, underpinned by a rise in global dairy prices and a strong US dollar, reported Reuters. 

The dairy products maker raised its base milk price to NZ$9.50 per kilogram of milk solids (kgMS) for the 2022/2023 season, from a prior forecast of NZ$9.00 per kgMS.

Synlait is bound to benefit from a steady rise in the US dollar this year as most of its milk products are exported.

Average international milk prices have also risen about 3% this year so far, according to the global dairy trade auction held by GDT events.

However, Synlait has kept the current season's milk price forecast unchanged. It had trimmed the estimate in May to NZ$9.30 per kgMS from NZ$9.60 per kgMS, citing a slump in dairy prices.

The company recorded an annual loss of NZ$28.5 million ($17.59 million) in fiscal 2021, but expects a return to "robust" profitability in fiscal 2022 on improved demand for infant base powder volumes.

A recent surge in demand for infant formula in the United States has baby formula makers in Australia and New Zealand line up to restock empty shelves in the world's biggest economy.

Dairy giants Fonterra and a2 Milk, which is also Synlait's second-largest shareholder, have submitted applications to the US Food and Drug Administration to supply baby food to the country.

Synlait's nutritionals segment, which includes consumer-packaged and base infant formulas, recorded a loss of NZ$28.8 million in fiscal 2021, compared with a profit of NZ$76.4 million a year ago.

Source: Reuters

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