Fonterra revises 2019/2020 forecast farmgate milk price

By Jim Cornall contact

- Last updated on GMT

Fonterra CEO Miles Hurrell says there are positive signals for milk prices.
Fonterra CEO Miles Hurrell says there are positive signals for milk prices.

Related tags: Fonterra, Milk

Fonterra Co-operative Group Limited has increased its 2019/2020 forecast Farmgate Milk Price range from NZ$6.25-$7.25 (US$4.01-$4.65) per kgMS to NZ$6.55-$7.55 (US$4.20-$4.84) per kgMS.

The advance rate the New Zealand dairy cooperative pays its farmer owners will be set off the mid-point, NZ$7.05 (US$4.52) per kgMS, of the revised range.

Fonterra chairman John Monaghan said the coop had been achieving good prices for its milk so far this season.

“Demand for whole milk powder (WMP) has been firm, and for the full season we’re expecting it to be above last year. Global WMP production is down year to date and expected to continue to decrease for the remainder of 2019,”​ Monaghan said.

“We are also continuing to sell our skim milk powder at higher prices than EU and US dairy companies in Global Dairy Trade (GDT) Events.”

Fonterra CEO Miles Hurrell said there are positive signals for milk price. 

“It is still very early in the season and a lot can change. There are a number of factors we are keeping a close eye on, which is why we’ve retained a wide forecast milk price range,”​ Hurrell said.

“These factors include global trade tensions and political instability in some of our key sales regions. And, as is always the case, we cannot predict the weather and clearly weather conditions play a big role in global supply.” 

Hurrell said, “One of our four priorities is to support regional New Zealand. If you take the NZ$7.05 mid-point of today’s revision to our forecast Farmgate Milk Price, it’s another NZ$450m (US$289m) into regional New Zealand.”

“Our earnings outlook for FY20 is based on a forecast Farmgate Milk Price, which still falls within our new forecast range of $6.55-$7.55 per kgMS. The mid-point of the revised range does mean our teams will need to continue to push hard to achieve our margins, but so far we’re comfortable with how this season is shaping up in terms of underlying business performance.” 

Related topics: Markets, Oceania, Industry growth, Dairy

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