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-op has lifted the mid-point of its forecast Farm gate milk price range by 25 cents to $7.30/kgMS. The new milk price range is now $7.00-$7.60/kgMS.
Fonterra chairman John Monaghan says the co-op has continued to earn good prices for its milk and as a result has increased the
“The higher price reflects a global dairy market that is tipped slightly in favour of demand.
“Our New Zealand milk production is forecast to be up 0.5% on last year. Annual milk production in the other key global supply regions of the US and EU are both growing at less than 1%.
“On the demand side, Global Dairy Trade prices have increased by about 6% since our previous forecast. Whole milk powder (WMP) prices, a key driver of our milk price, have hit their highest level since December 2016.”
Fonterra says at this stage of the year, it has contracted a good proportion of our sales book.]
Monaghan says that gives them the confidence to increase the mid-point of our forecast farm gate milk price range by 25 cents.
“Farmers will welcome what would be the fourth highest milk price in our history. It represents a $11.2 billion cash injection into our communities.”
