Milk processors across the board have announced increases to their opening prices for the 2021/22 season.
In a statement yesterday, Saputo Dairy Australia confirmed its opening weighted average farmgate milk price would be $6.65 per kilogram milk solids for the Southern Milk Region this season.
"Determining the outlook for milk prices for the 2021/22 milk year has again been challenging, despite some recent improvements and stabilisation in global trade conditions," it said.
"Ongoing uncertainty in commodity prices and exchange rates arising from the COVID-19 pandemic is expected to continue to impact world economies and the dairy market for the coming milk year."
Bega Cheese confirmed opening prices of $7/kg MS for northern Victoria and the Riverina, $6.80/kg MS for southern Victoria and South Australia, and $8.50/kg MS for organic.
Last month Fonterra revealed a $6.55/kg MS opening price, which was 15 cents/kg MS higher than last year's opening price.
Burra Foods also announced a $6.40-$6.80/kg MS price range, marking a rise of $0.30/kg MS on its opening price last year.
Rabobank senior dairy analyst Michael Harvey said dairy farmers would be reasonably pleased with the prices.
"They're all slightly higher than they were this time last year, so that's encouraging," Mr Harvey said.
"They're at levels that we would think were broadly profitable for a lot of producers."
He said the market was expected to hold going forward and there were a number of factors playing in dairy's favour, including high farm confidence, low interest rates and good seasonal conditions.
"Outside of the milk pricing environment, the other drivers of profitability look quite favourable," he said.
"We're looking at a third consecutive year, particularly across that southern export pool of Australia, where we're talking about above industry standard of profitability, which is a really encouraging thing."
He said risks still remained and Rabobank analysts were predicting a correction in the commodities market in the coming 12 months, but said it was expected to be a "soft landing".
"These are early price signals by normal standards in the sense that the season hasn't got underway," he said.
"That gives quite a lot of security to farmers to go away and farm to these sorts of milk prices - five years ago it would have been a great result to be getting mid six dollar milk prices regularly despite a global pandemic."
Milk Exchange commercial development general manager Richard Lange said there were still some uncertainties on the market, including the pandemic and the high dollar, but positives included a shortage out of Europe and strong powder prices.
"Those sort of improvements have meant there's an opportunity to pass that on to farmers," he said.
"I think the prices do reflect the market and there has been an increase across the board of about 20c/kg up from closing."
Mr Lange said the demand for dairy in the domestic market had also played a part.