Inside Milk
Fonterra raises milk price forecast
The New Zealand dairy cooperative Fonterra announces that it is increasing the milk price forecast for the 2019/2020 season. The good demand for whole milk powder and the higher prices for skimmed milk powder are the reasons for the cooperative to take this step.
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Fonterra expects a milk price between $2019 and $2020 per kilo of milk solids (approximately 6,55 liters of milk) for the 7,55/11,5 season, which started in June and ends in May. This brings the milk price forecast to $0,30 per kilo increased. For the time being, the cooperative is sticking to a milk price of $7,05 per kilo of milk solids, or the midpoint.
Whole and skimmed milk powder
According to the dairy cooperative, the increase in this milk price forecast is mainly based on the good demand for whole milk powder. "We expect that the demand for whole milk powder this season will be above last year's level," the processor wrote in a statement. Skimmed milk powder from Fonterra was also against this last season higher prices then sold product from the European Union and United States. This also plays a major role in the increase in the expected milk price.
Due to this price increase, Fonterra's milk price is currently at the highest level since 2013. In this year, a milk price of $8,40 per kilo of milk solids was ultimately paid. In 2007 and 2010, the milk price was also slightly higher than it is now. However, it is not yet clear whether the milk price will hold up. After all, the season has only just started.
* This article concerns New Zealand dollars