Milk price is not milk price. To an investor it’s just a headline figure to the dairy farming community its not it’s more nuanced. Flat verses seasonal processors have pushed towards flat milk supply which for the farmers is more costly and comes with higher risks as opposed to a more seasonal pricing model. So if your flat then WCB wins followed by MG then DFSC. Seasonal payments are lead by UDC, Burra; ACM. Fonterra is heading to a more seasonal payment system. So it’s all about pricing spread and MG still has the worst pricing spread across their supply base about $ 1.00kg/ms. UDC, Burra ect have much tighter pricing spread peak to off peak. So it’s not the big boys winning the best milk price race right now its UDC. MG pays like a demand driven fresh milk processor when it’s a supply driven processor. MG has admitted its FMI milk pricing only added cost to both MG and the farmer’s businesses structures and did not generate any extra profits above commodity. So until this pricing spread is fixed $5.20kg/ms is $4.65 for some suppliers That’s why UDC is just sucking up supply in the west and will continue to from all processors it give farmers the safest and most resilient business model with the lowest cost base. In other words it’s not all just about what the factory wants but what the farmers need for a stable and hopefully growing industry. Because the milk pool will not grown with the continued discounting of spring milk. And Ari is yet to indicate he has grasp this aspect yet and farmers don’t have time to wait as the communication for MG has been scant since the road show and that was an abject failure with regards building confidence
MGC Price at posting:
65.0¢ Sentiment: None Disclosure: Held
