After the GDT event Synlait lifted its forecast price by 25c to $6.25 while Fonterra remained on $6, a prediction it made in mid November.
“International dairy commodity prices have improved further since our last announcement in November and although prices have eased slightly in early 2017, we believe $6.25 is now a realistic estimate for the current season," Synlait chairman Graeme Milne said.
Fonterra Australia increased its average payout to A$5.20 (NZ$5.50/kg), which managing director Rene Dedoncker said resulted from improved global commodity markets and progress on key initiatives for the Australian business.
Fonterra chairman John Wilson said that the price increase was aligned to global prices, not in response to its Australian competitors.
In Australia, milk supply was highly competitive, given the fragmented processing base and no growth in volume, Wilson said.
Overnight on February 7, the GDT price index rose 1.3%, assisted by whole milk powder average prices rising 1%, butter up nearly 5% and anhydrous milk fat (AMF) up 4%.
After gaining 20% over two months from mid-October to early December, the GDT price index then fell 2.5% during the subsequent two months, mid December to early February.
Analysts called it market consolidation, underpinned by tight global supply and some encouraging signs of improving Chinese demand.
“The lift in the GDT, which coincided with the Chinese New Year, provided a positive signal for demand ahead,” Westpac economist Sarah Drought said.
AgriHQ dairy analyst Susan Kilsby spoke of concerns the NZ premiums for milk powders would not be sustained but the auction results allayed those concerns.
NZ skim milk powder was achieving about US$500/tonne premium over year-old European intervention stocks, she said.
