Fonterra more positive about milk price

A few weeks ago, Fonterra released a milk price forecast for the first time for the current season, which started in June and will last until May next year. The forecast issued at the time was increased yesterday by $0,50 NZD to a range of $5,90 to $6,90 per kilo of milk solids (approximately 11,5 liters of milk). The midpoint of the range is provisionally set at $6,40. From a historical perspective, this can be called an average milk price.

China back on the market
The positive adjustment is due to better sales opportunities on the Chinese market, which is extremely important for the dairy cooperative. After a significant drop in demand at the beginning of this year due to the corona outbreaks, dairy consumption in China is now picking up again. This was also evident from the latter Global Dairy Trade, which showed the largest increase since 2016. The price of whole milk powder in particular rose sharply, which is the most important dairy commodity for New Zealanders.

At the same time, Fonterra is keeping its guard up, as milk supplies in Europe and Latin America are increasing and the risk of a second wave of infections is also real. This can reduce sales opportunities. Member dairy farmers are therefore called on to be careful in liquidity planning.

Correction for milk price season 2019/2020
The final milk price for the past season will be announced in September, at the same time as the publication of the annual figures for the current financial year. In contrast to the higher forecast for the current season, this forecast has been adjusted downwards. For example, the midpoint of the range has been reduced by $0,05 to $7,15. The reason for this is less favorable exchange rates.