Jamie Gray

Jamie Gray is a business reporter for the New Zealand Herald and APNZ wire agency

MyFarm tips lower Fonterra milk price forecast

MyFarm expects the milk price will rise as the season goes on. Photo / Christine Cornege
MyFarm expects the milk price will rise as the season goes on. Photo / Christine Cornege

Farm investment company MyFarm expects Fonterra to announce a $6.60 to $6.80 a kg milk price for the 2014/15 year when the co-operative issues its forecasts this morning.

That would compare with Fonterra's forecast for the current 2013/14 season, which ends on May 31, of $8.65/kg milk solids.

Part of the reason for a lower opening price was that major Chinese buyers were staying out of the market at the Global Dairy Trade auction, MyFarm said in a market commentary.

"In due course they will need to start buying again, which will place upward pressure on prices," MyFarm said.

Bank economists have been picking a starting milk price of about $7 a kg for 2014/15.

MyFarm said it had confidence that the milk price would increase as the season progressed, to about $7 to $7.20/kg by the end of 2014/15.

It said the dairy industry had benefited from a milk price that had increased at a compound growth rate of 5.4 per cent a year over the past decade.

- APNZ

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