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Murray Goulburn cuts forecast milk intake

Australia's biggest dairy processor, Murray Goulburn, has cut its forecast milk intake for the 2017/18 financial year but says the reduction has not affected the price that the company expects to pay farmers for their milk.

"At this stage, Murray Goulburn's total FY18 (2017/18 full-year) milk intake is expected to be approximately 2.3 billion litres, prior to any significant upside or downside from seasonal impact," Murray Goulburn said in a trading update on Monday.

In June, Murray Goulburn said it expected a milk intake of about 2.5 billion litres for 2017/18.

But Murray Goulburn says its opening farmgate milk price for the current season remains at $5.20 per kilogram of milk solids, and the price range for the whole year is still forecast to be between $5.20 and $5.50.

Murray Goulburn said the the impact of the reduced milk intake had been offset by cost and business improvements.

But the company warned that if the Australian dollar kept rising in value over the full financial year, the prospect of achieving the top of the price range, $5.50, may become uncertain.

"Murray Goulburn will continue to consider all avenues to maximise the available farmgate milk price," the company said.

Units in Murray Goulburn's listed funding entity, the MG Unit Trust, fell in the wake of the news.

They were one cent, or 1.36 per cent, lower at 72.5 cents at 1058 AEST.

Murray Goulburn has lost some of its dairy farmer suppliers since the company unexpectedly slashed the farmgate milk price in April 2016, causing chaos in the dairy sector.

The company initially set an opening farmgate milk price of $4.70 for the 2017/18 season - much lower than other dairy processors - but just weeks later lifted the price to $5.20.

Murray Goulburn at the time said the increase was needed in the current competitive environment to maintain milk supply and provide improved cash flow for suppliers.

Meanwhile, Murray Goulburn has agreed to sell its Kiewa Country brand and some associated assets to a local business.

The sale price is confidential.

Murray Goulburn in May said it would close its manufacturing facilities at Kiewa in northwest Victoria, along with plants at Edith Creek in Tasmania and Rochester in Victoria.

Murray Goulburn expects to report its financial results for the 2016/17 year on August 22.

Austrlaian Associated PressBack to Breaking News

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