Synlait Milk, the NZX-listed dairy company, increased the forecast payout for its farmer suppliers to $6.25 per kilogram of milk solids for the current season up from a prior forecast of $6/kgMS.
"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/kgMS is now a realistic estimate for the current season," chairman Graeme Milne said in a statement.
Dairy prices eased in January but eked out a gain at this week's GlobalDairyTrade auction, bucking expectations for a decline, as both whole and skim milk powder rose. The GDT price index rose 1.3 per cent to US$3,537, up from US$3,517 at the previous auction three weeks ago.
John Penno, Synlait managing director, said a return to a financially sustainable milk price after two challenging seasons is good news for Synlait's 200 suppliers in Canterbury.
The forecast payout is slightly higher than the $6/kgMS Fonterra Cooperative Group is forecasting it will pay its 10,500 farmer shareholders.
Synalit's shares last traded at $3.15 and have gained 14 per cent over the past 12 months.