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.
Chief executive Miles Hurrell says the strong opening forecast reflects continued demand for dairy coupled with constrained global supply.
“The long-term outlook for dairy remains positive, despite recent geopolitical and COVID-19 related events impacting global demand in the short-term,” he says.
On the supply side, growth from key milk producing regions is expected to remain constrained as high feed, fertiliser and energy costs continue to impact production volumes.
“These demand and supply dynamics are expected to support dairy prices in the medium to long-term,” says Hurrell.
“However, we are operating in an increasingly volatile global environment and are managing a wider range of risks than usual.
“This includes the potential for further impacts from COVID-19, financial markets and foreign exchange volatility, global inflationary pressures, a tightening labour market, increasing interest rates, geopolitical events, as well as the possible impact on demand from higher dairy prices.
“This is why our 2022/23 forecast range is so wide at this point in the season.”
For the 2021-22 season, which ends on May 31, Fonterra has maintained its Farmgate Milk Price range of $9.10 - $9.50/kgMS.
