Today Fonterra announces an increased forecast Farmgate Milk Price, reports a strong start to the 2020 financial year and points to some of the challenges it is facing.
Fonterra Chairman John Monaghan says the Co-op has continued to earn good prices for its milk and as a result has increased the mid-point of its forecast Farmgate Milk Price range by 25 cents to $7.30 per kgMS.
“The higher price reflects a global dairy market that is tipped slightly in favour of demand.
“Our New Zealand milk production is forecast to be up 0.5% on last year. Annual milk production in the other key global supply regions of the US and EU are both growing at less than 1%.
“On the demand side, Global Dairy Trade prices have increased by about 6% since our previous forecast. Whole milk powder (WMP) prices, a key driver of our milk price, have hit their highest level since December 2016.
“At this stage of the year, we have contracted a good proportion of our sales book and that gives us the confidence to increase the mid-point of our forecast Farmgate Milk Price range by 25 cents.
“Farmers will welcome what would be the fourth highest milk price in our history. It represents a $11.2 billion cash injection into our communities.”
The forecast Farmgate Milk Price range is now $7.00-$7.60 per kgMS.
Fonterra CEO Miles Hurrell says that the Co-operative has made good progress moving to its new strategy and has had a strong first quarter.