Inside Milk
'Old normal' not yet back on the dairy market
Once every 3 months, Fonterra announces the milk price for the 2020/2021 season. The New Zealand dairy cooperative sees no reason to adjust the July forecast increase either downwards or upwards.
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This means that the forecast remains in 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 is not a bad payout level. The final milk price for the past season will be published later this month at the same time as the annual figures
Moderately positive
Fonterra is moderately positive about dairy exports. According to chairman John Monaghan, the supply/demand ratio is currently reasonably balanced. However, he is concerned about the growing milk supply in Europe and the United States. There is uncertainty as to whether demand can be sustained. The economic uncertainty resulting from the corona crisis may affect the purchasing power of consumers.
The 2020/2021 season is only a few months away. Monaghan says that movements in the dairy market can still go in any direction and therefore urges the cooperative's member dairy farmers to be careful when making financial decisions. According to him, the 'old normal' has not yet returned to the dairy market.
Can lead be sustained?
During the last one Global Dairy Trade, organized by Fonterra, the market showed a slight decline across the board. The average price fell by 1%, although the price of skimmed milk powder did show an increase. What is also striking is that the start of the milking season in New Zealand can be described as positive. In July the supply was down almost 5% ahead of last year. In the coming months, when seasonal production increases rapidly, it will become clear whether the lead remains intact.