What Would Synlait Be Worth to Fonterra or a2 Milk?
Speculation of a possible joint move by Fonterra and a2 Milk to buy Synlait raises a much bigger strategic question, says agribusiness expert Dr Nic Lees.
The overall index rose by a further 9.9% at the GDT auction last week.
The GDT whole milk powder index lifted 12.9% overnight, with an average price US$2824/MT. The skim milk powder index rose 13.4% with the average skim milk price at US$2267/MT.
"It is good to see prices moving up," Wilson told Dairy News. "We have known right through that the current global prices are unsustainably low.
"They are the result of a unique situation where we had far too much supply in 2014 because of good weather and really high prices globally, so dairy farmers produced more milk. We had the impact of Russia and China -- the two big demand markets of the world -- with Russia closing its market effectively, particularly to European products, and China changing its in buying profile.
"You had this reaction where global dairy prices dropped to unsustainably low levels. We are now seeing that market slowly come back into balance and we believe it will do so over the next six months or so.
"Pleasingly we are seeing it come up relatively quickly and we would expect whole milk powder prices to continue to climb to that US$3000-$3500/MT level over the next six months, maybe earlier. It will depend on where milk production comes from and how much milk is produced globally over the next six months."
