$8 final milk price likely
An $8/kgMS farm gate milk price is still on the cards with less than six weeks left to run this season.
Open Country Dairy chief executive Steve Koekemoer says this signifies unchartered territory: breaking the $10/kgMS mark and lifting the milk price to new heights.
Open Country is also forecasting a price range of $10.35 to $10.65 for milk supplied between February and May.
Owned by Talley's Open Country pays its farmer suppliers in full four times during the season.
Koekemoer says dairy prices continue to rise and the company is well positioned to take advantage of the market conditions to deliver strong results.
He notes that globally, milk production volumes in key supply regions are down. OCD expect this to continue to drive prices slightly higher short-term.
"The current high feed prices, due to worldwide feed shortages, make it difficult to increase supply," says Koekemoer.
"Predicting the tipping point, where prices will peak and burn off demand, will be key. I expect, we are not too far away from this happening, looking at current market pricing."
OCD's product mix continues to deliver record returns, which is flowing through to its financials, he says.
The $10-plus payout "will be a fantastic end to the season for everyone".
"The business is in a very strong position and our strategy to slow sales while prices were on the rise is providing a good season result," says Koekemoer.
OCD operates four processing plants around the country.
Koekemoer says the plants have continued production despite challenges posed by Omicron.
"Our factories are managing this new and disruptive phase of the pandemic extremely well and our projects team is keeping all plant upgrades on track.
"We have been able to continue processing by keeping teams in 'bubbles' and reassigning staff members whenever we face Covid absenteeism.
"We have robust plans in place to keep staff safe while getting through to the end of the season."
Free Covid Test Kits For Farmers
Open Country is distributing free Rapid Antigen Test (RAT) kits to all farmer suppliers.
Milk tankers are dropping off kits on farm on their milk run.
OCD chief executive Steve Koekemoer says all packs should be delivered this month.
"Navigating the Omicron environment can be hard, especially when living remotely.
"Having RA tests available can make a difference to our businesses and we felt it was the right thing to do to keep everyone safe," he says.
