Strong production, tested demand send milk prices crashing
Strong global milk production and rebalancing of demand among key buyers has delivered one of the biggest drops in whole milk powder prices in recent years.
The co-op says there are two opportunities in the 2015-16 season to secure a GMP on 60 million kgMS – up to 40 m kgMS is available in June, and up to 20 m kgMS will be available in December.
Farmers looking for a GMP can now apply to supply some of their estimated milk production at one or more of five prices ($5.25, $5.15, $5.05, $4.95, and $4.85) at and below the 2015-16 forecast farmgate milk price. Last month the co-op announced an opening forecast milk price of $5.25/kgMS for the new season.
Applications close 5pm June 19. Allocations will be made based on the prices at which milk solids were offered from the lowest price up and the GMP will be determined at the highest price at which a total quantity of milk solids in a specified range is reached.
Fonterra’s head of origination, Arron Atkinson, says farmers have the option to apply their volumes at one or more of five prices at and below the 2015-16 forecast farmgate milk price. This process allows for the prioritisation of allocation in the event that the GMP is oversubscribed.
“All accepted applications will receive the same guaranteed milk price. However, depending on the total milk solids offered at each price, some farmers may not get all or any of the volume they offered,” he said.
For applications made in June, farmers can apply to fix a GMP for between 10-75% of their estimated milk production for the 2015-16 season.
The second GMP opportunity will be available in December for production supplied December 1, 2015 to May 31, 2016.
Applications can be made online via Farm Source or request an application pack from Fonterra’s supplier services team on 0800 65 65 68.
