Synlait has dropped its forecast milk price for the season about to end and is predicting of a lower opening price for next season
Dairy prices have eased significantly this year in line with other commodities, the company said. Photo: 123RF
The dairy company is forecasting $7.05 per kilo of milk solids, down from $7.25.
This is slightly below Fonterra's recent forecast of $7.10 to $7.30.
Synlait's opening forecast for the 2020/21 season has been set at $6.00, which is in the middle-range of Fonterra's forecast of $5.40 to $6.90.
In the 2018/19 season the company paid $6.40 kgMS to its 280 farmer suppliers.
Synlait said the decision to reduce its forecast base milk price for the current season is because dairy prices have eased significantly this year in line with other commodities.
Chief executive Leon Clement said the decision to reduce its forecast base milk price for 2019/20 season was because, in line with other commodities, dairy prices had eased significantly this year and as a result were lower than the company was anticipating when the forecast was set in January.
''Covid-19 has created significant global uncertainty. We don't yet have a clear view of its economic impact.''
''We do know it will impact demand, resulting in our decision to release a conservative opening forecast for the 2020/21 season, "he said.
Synlait said forecasts are based on the best information available to the company at the time and that it will continue to monitor movements and keep its farmer suppliers up to date.
Synlait's final milk price for the 2019/20 season will be confirmed when the company releases its full year 2020 result in September.
The 2020/21 season forecast will also be updated.