RNZ

Dairy company Synlait has increased its forecast payout for the current production of milk solids on the back of strong market prices.

The company is now forecasting a payout of $7.25 a kilogram of milk solids from its previous assessment of $7 a kilo.

Synlait chief executive Leon Clement said prices had been strong since the end of last year.

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"We believe [they] will hold in the medium term as supply and demand continue to be evenly matched."

Rival Fonterra has a forecast of between $7.00 and $7.60 a kilo.

Analysts have raised their forecasts in recent weeks as recent dairy auctions have shown prices firming after a soft spot in the middle of last year.

The forecasts, if confirmed, would mean the best returns for dairy farmers since the record season of 2013/14, when farmers were paid more than $8 a kilo.

- RNZ