Fonterra unveils divestment plan
Fonterra is exploring full or partial divestment options for its global Consumer business, as well as its integrated businesses Fonterra Oceania and Fonterra Sri Lanka.
This was primarily driven by decreased demand for butter from Iran and for fluid milk products from China, down a combined 20,068 MT, says Fonterra in its global update.
Exports were up for the 12 months to February by 3.7% on the previous comparable period, driven by WMP, fluid milk products, cheese and infant formula, up a combined 156,044 MT.
New Zealand’s overall milk production for the 12 months to February was 1.6% lower than last year.
In February the country’s overall milk production was flat on a litres basis (up 1.7% on milk solids basis compared to the same period last year).
Adjusting for the leap year, February 2020 production was down 3.4% (down 1.8% on a milk solids basis).
Drought conditions across the North Island and heavy rainfall in the lower South Island affected milk production.
Fonterra’s New Zealand collection for the month ended February 29 was up 0.3% on last February. Season-to-date collection was down 0.3% on last season.
North Island milk collection for the month ended February 29 was down 4.1% on last February. Season-to-date collection was down 1% on last season.
Drought conditions persisted throughout February, impacting milk production across most regions, with northern areas significantly impacted.
South Island milk collection for the month ended February 29was up 5.6% on last February. Canterbury and Southland/ Otago regions received rain mid-month which improved pasture growth.
Season-to-date collection was up 0.9% on last season.
The inclusion of off‑GDT sales contributed 8c/ kgMS to the milk price for the season to January 31, 2020.
Fonterra’s Australia collection continued to drop. In February it was down 2.7% on the same month last season. Season-to-date collections were down 15% on the same period last season.
This compares to Australia’s overall milk production – not just for Fonterra – which was down 5.6% in the 12 months to January.
Fonterra collections continue to be impacted by a highly competitive milk supply market which has seen losses primarily to milk brokers.
Fonterra also decided to purchase less milk from third parties given the increased focus on higher value products.
EU milk production increased by 1.1% in January compared to the same period last year. The largest production growth can be seen in The Netherlands (up 2.8%), Poland (up 2.2%) followed by France (up 1.3%) and Germany (up 0.7%).
The increase in milk production is likely to translate into more cheese, especially from Poland where the growth has been sustained for the last six months.
EU milk production for the 12 months to January was up by 0.6% compared to the same period last year. EU exports for the 12 months to December were up 7.6% on the previous comparable period. SMP, fluid milk products, butter, cheese and lactose were the main drivers of this growth.
US milk production increased by 5.3% in February compared to the same period last year. However, with February 2020 containing an extra day due to ‘leap year’, the adjusted increase is closer to 2% on a daily basis.
February’s continued milk production growth is driven by steady increases in herd sizes and in milk per cow.
Milk production for the 12 months to February was 0.8% higher compared to the same period last year.
US dairy exports increased 18.8% in January compared to the same period last year, driven primarily by skim and whole milk powder.
