Murray Goulburn to pay a lower farmgate price than forecast

Murray Goulburn announced on 6 June in a statement to the ASX that it would pay just $4.70 kg/MS for its milk at the beginning of the 2018 financial year.

The company had originally forecasted that it would pay between $5.20 kg/MS to $5.40 kg/MS for the year, noting: “This range is subject to various assumptions, including dairy commodity prices, exchange rates and achieving cost out initiatives, as well as achieving milk intake of approximately 2.5 billion litres.”

In the 6 June statement, Murray Goulburn’s  chief executive officer, Ari Mervis, said that in setting the FY18 FMP forecast, the company has taken a prudent view on key assumptions for commodity prices.

“Although global commodity prices have shown some recovery since this time last year, whole milk powder and particularly skim milk powder prices remain under 10 year averages. This has been somewhat offset by firmer butter and cheddar prices. We have also had regard to Global Dairy Trade auction results over the past two months and current futures pricing, both of which suggest some ongoing price volatility in global markets.”

In correspondence to suppliers, Mervis noted that while the FY18 opening and forecast prices were an improvement on FY17, the company’s performance remains below his expectations.

The company said that a further update on the strategic review is expected to be provided at the time of MG’s full year results in August.


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