Hokitika-based dairy co-operative Westland Milk said it had raised its forecast payout for 2016/7 by 20c to a range of $4.55 to $4.95 a kg of milksolids.

Westland, the second biggest co-op after Fonterra, said the company's forecast average operating surplus had increased to $4.75 - $5.15 per kg while the average cash payout range had increased to $4.55 - $4.95 per kg.

Chairman Matt O'Regan said the increase was a result of a recent uplift in international dairy prices for the range of products Westland produces, along with this month's positive GlobalDairyTrade auction results.

O'Regan said the advance rate payable on September 20 had been approved at $3.80 per kg.


He said in a statement that, despite the higher forecast, the New Zealand dollar continued to be a challenge, along with the short-term over supply coming from the international markets.

Fonterra last week raised its farmgate milk price forecast for 2016/17 to $4.75 per kg of milksolids, up from a previous forecast of $4.25/kg.

Combined with the forecast earnings per share range for the 2017 financial year of 50 to 60 cents, the total payout available to Fonterra farmers in the current season is forecast to be $5.25 to $5.35 before retentions, it said.

DairyNZ's estimated break-even point is $5.05/kg.