WHEAT prices are up $40 a tonne and Fonterra's milk price jumped to a weighted average of $4.83 per kilogram of milk solids.
The surging wheat price follows a 40 per cent boost in Chicago Board of Trade first contract wheat futures prices since they crashed to US428 cents a bushel six weeks ago.
Dry conditions in France, Germany, Russia and Kazakhstan and extremely wet conditions in Canada have forced world wheat markets to rise, despite global stocks at near record levels, creating optimism for Australian growers.
This week, AWB Limited lifted its estimated return for eastern pool Australian Premium White wheat to $290 a tonne and Viterra's pre-harvest pool estimate was up $8 to $270 a tonne.
CBOT September wheat futures ended last Thursday at US596 c/bushel, or $251 a tonne and only the strength of the Australian dollar stopped the gains from being higher.
December futures on the CBOT hit US625 c/bushel, or $A266 a tonne, last Thursday before closing at US612 c/bushel, or $A262 a tonne, on Monday.
AWB commodities general manager Mitch Morison said "when you see the production estimate drop for one country by a few million tonnes, it is still a small amount, but when similar revisions apply across a number of key exporters, the impact adds up".
Meanwhile, Fonterra farmers will breathe a sigh of relief with news of its backdated increase of 24c/kg butterfat and 60c/kg protein for its Victorian and Tasmanian suppliers.
This means the NZ company's season average farm-gate price now rivals its competitors.
Fonterra came out of the blocks first with an opening price of $4.36kg/MS in May.
However, once the new season hit at the beginning of this month, other processors opened at the $4.70kg/MS mark or higher.
Fonterra national milk services manager Heather Stacy said the price review was "based on market conditions and business performance."
Burra Foods last week announced a final step-up for last season adding an extra 4c/kg butterfat and 10c/kg protein to its price.
