Cash-strapped Synlait Milk has increased its forecast base milk price to $8.60 per kg of milksolids from $8.00/kg. 

Despite the forecast increase, Synlait said it continued to take a conservative approach to its 2024/2025 forecast, given the exposure to volatile future global dairy commodity prices at the beginning of the season. 

“Retention of Synlait’s milk supply remains a critical priority for the company,” it said. 

The dairy and infant formula maker is in the middle of a $217.8 million capital raise, which goes to a shareholders’ vote on September 18. 

Synlait said it was committed to delivering a competitive milk price and advanced rate profile, which has also been lifted for 2024/2025 to ensure the company’s on-farm offering remains attractive to farmer suppliers. 

The company said its final milk price for the 2023/24 season will be confirmed when the company’s full-year result is released on September 30. 

Last month Fonterra lifted its 2024/25 season forecast farmgate milk price midpoint by 50c to $8.50 per kgMS and raised its advance rate schedule for farmers. 

Fonterra also said its 2024 full-year earnings from continuing operations were expected to be at the top end of the forecast range of 60-70 cents per share. 

Synlait Milk’s long-awaited recapitalisation plan will see China’s Bright Dairy take an outright majority in the troubled company, which has processing assets in Dunsandel and Pokeno. 

The capital raise represents around three times Synlait’s current market capitalisation of $86m and will largely deal with $180m of retail bonds that fall due in December. 

If approved, Bright’s holding will go from 39.01% to 65% while a2 Milk’s stake will remain at 19.8%. 

Jamie Gray is an Auckland-based journalist, covering the financial markets and the primary sector. He joined the Herald in 2011.