News Milk price
Fonterra shaves milk price
For the first time this season, Fonterra has lowered the forecast for the milk price. The dairy market is less prosperous, which has to pay for the milk price. The lower dairy prices are caused by unrest in many parts of the world.
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The milk price forecast has been lowered by 30 cents to a mid-price of $9,30 per kilo of milk solids, with the range between $9,10 and $9,50. Historically, this is still a top price, but lower than estimated in February. As an argument, Fonterra refers to a less wild demand for dairy products.
Unrest in the world
This was clearly evident last week when the prices of butter, cheese and milk powder were markedly depreciated on the Global Dairy Trade. Miles Hurrel, CEO of the dairy cooperative, says that the strict corona measures in China are causing a drop in demand. The war in Ukraine also plays a role, as does the unrest in Sri Lanka. The people there revolted against the government.
Another possible factor is that New Zealand's milk production has picked up somewhat in the final phase of this season (which ends in June). In March, the milk supply was still 'poorly' 1,6% below the level of last year, while in the preceding months the backlog was more than 6%. Although the dairy market is no longer bullish there is no need to fear a price drop. Dairy futures on the NZX are – also for later this year – at historically high levels.