In a trading update issued Wednesday evening,the company said it had anticipated farmgate milk prices to rise between 15-20 per cent,depending on global dairy commodity markets.
“However ... there has been particularly strong competition amongst milk processors during June and July,” the trading update stated. Farmgate prices in Victoria have turned out to be to 30 per cent higher than 2022 levels.
These price rises have been passed onto retailers and felt by consumers,the company acknowledged.
“The farm gate price increase will benefit farmer suppliers,impact all Australian dairy companies,and is already being reflected in higher product prices in the retail and food service market,” it said.
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“Bega Cheese expects that the company’s[2023 financial year] performance will be impacted by the delay in timing of some of these higher product prices and the finalisation of secured milk volumes in July.”
Investment firm Bell Potter,which has a ‘hold’ recommendation on Bega,reduced its long-term target price on the stock from $4.20 to $3.80 due to the “ongoing dislocation in farmgate pricing and ingredient pricing”.