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 co-operative has revised its milk price range – from $8.75-$10.25/kgMS to $8.50-$10/kgMS.
The midpoint reduces from $9.50 to $9.25 but current advance payment rate of $5.70/kgMS is unchanged.
Fonterra chief executive Miles Hurrell says revision will be disappointing for farmers but it reflects a number of factors - including the recent downward trend in global dairy prices driven by some short-term softening in global demand, and the general impact of inflation on purchasing behaviour.
“However, we believe the longer-term outlook for dairy remains positive,” says Hurrell.
Dairy prices on Global Dairy Trade has been dropped almost every auction since March. Over the past 11 auctions, only one (June 7) recorded a rise in the GDT price index.
Whole milk powder prices, used as a benchmark to set the milk price, has also been on the decline- dropping from US$4757/metric tonne on March 1 to US$3417/MT in the last auction two weeks ago.
