Fonterra Australia has stepped up its farmgate milk price to $5.50 a kilogram milk solids.
It has also updated its forecast closing price range for the 2017/18 season to $5.50-$5.80/kg MS.
Suppliers will also receive the additional 40c/kg MS announced previously, in lieu of payback for the price clawback of season 2015/16.
This brings the total average cash paid to $5.90/kg MS.
The increase will apply from July 1 and will be paid on 15 August 2017.
Fonterra Australia managing director René Dedoncker said that improved market conditions and the strength of the Australian business supported this step up.
“Since the start of this season our milk pool has grown, and our assets are nearing optimal capacity,” Mr Dedoncker said.
“Coupled with strong demand from Fonterra’s Australian and global customers, this has enabled us to deliver this step up to our farmers.
“This price increase will improve cashflow positions on farm, reinforcing growing confidence of our farmers.”
Fonterra has also updated its forecast closing milk price range, to $5.50 to $5.80kgMS, and noted that while commodity prices are strong, the rally in the Australian dollar was likely to influence the end of season milk price within that forecast range.
“We continue to monitor currency movements closely and will keep our farmers updated throughout the season with the latest market conditions,” Mr Dedoncker said.
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