Milk bidding war continues as season start approaches

Fonterra and Lactalis announces price increases as July 1 deadline approaches

UPDATED
Dairy
PRICE LIFT: Fonterra has lifted its opening average farmgate price to $6.95a kilogram milk solids.

PRICE LIFT: Fonterra has lifted its opening average farmgate price to $6.95a kilogram milk solids.

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The opening farmgate milk price bidding war is showing no signs of abating with two major processors announcing increases on Friday.

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The opening farmgate milk price bidding war is showing no signs of abating with two major processors announcing increases on Friday.

With just days to go before farmers and processors need to have supply contracts signed, processors are lifting prices in a bid to ensure they are not caught short of supply.

Fonterra announced a 10 cents a kilogram milk solids price rise on Friday, taking its average price to $6.95/kg MS.

The rise matches the price announced by Saputo Dairy Australia earlier in the week and just pips the price offered by Bega in southern regions of $6.94/kg MS but is behind Bega's northern Victorian price of $7.09/kg MS.

Lactalis announced weighted average increase of 10 cents a kilogram MS for its flat milk payment system.

The Lactalis average price for Gippsland and the Western District is now $7.35/kg MS, including a guaranteed $0.10 /kg MS retail support.

In Tasmania its average price is now $7.25/kg MS, as there is no retailer support in this region.

In northern Victoria and southern NSW/Riverina the average price is now $7.50/kg MS, including a guaranteed $0.25/kg MS retail support.

Fonterra's price now sits at the top of its opening forecast range - suggesting there is less room for step ups during the season.

"The price rise to $6.95/kg MS takes us to the top end of the forecast range we provided when we opened on May 10, and reflects our commitment to supporting our farmers and paying a competitive milk price," Fonterra managing director René Dedoncker said.

In a letter to suppliers, Lactalis national milk supply manager Matt Morrow said Lactalis hoped the increased pricing supported its commitment to suppliers to be paying a strong competitive price.

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The continued bidding war suggests a number of farmers are yet to put pen to paper on next season's contracts.

The opening price lift is the second by Fonterra.

The company announced its initial opening price of $6.55/kg on May 10, but that was short of the price announced by other major processors on June 1.

It then lifted its opening price to $6.85 a kilogram milk solids, up 30 cents/kg MS, on June 4.

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