Dairy farmers could finally have break-even milk prices this season, AgriHQ dairy analyst Susan Kilsby says.
Dairy prices lifted by 12.7 percent overnight. Photo: 123rf
This season's forecast of $4.25kg/ms is the third season of prices below $5.
Most farmers need about $5kg/ms to cover their costs, which is about $US3000 a tonne for whole milk powder, the industry's main export.
In the overnight Global Dairy Trade auction prices lifted by 12.7 percent and whole-milk powder surged 18.9 percent to $US2695 a tonne.
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Prices were also strong this time last year with a whole milk powder price of $US2824 a tonne in October, which dropped to $US1890 in February and then the season ended on a dismal payout of $3.90kg/ms.
But Ms Kilsby said this time it was looking different.
"It's now looking more likely that we might get to a point where farmers can break even this season."
It was unlikely that whole milk powder prices would get up to $US3000 a tonne, but there had been a big lift this month, she said.
"I don't think we'll see it continue to lift at the rate it has done, but it's certainly looking a lot more positive.
"To hear it at this time of the year when farmers are flat-out calving and there is so much going on - a bit of positivity in the market will really lift spirits."
Former sharemilker of the year Charlie McCaig milks just over 1000 cows in Taranaki - and said the auction results were a good morale booster.
"It puts a smile on your face, but at this point I think we're just sitting still and waiting to see what happens. 'Cautiously optimistic' is the right word to describe how I feel about it."
Mr McCaig was 60 percent of the way through calving, and said it was going well.
"The sun is shining, milk prices are up - it's a good day to be farming today. Budgets are tight this year for sure and I think there will be a lot of people looking at that result and feeling a little bit better about the world today."