Fonterra slashes forecast milk price, again

The co-operative’s new forecast range for this season is $8.50 to $9.50/kgMS with a mid-point of $9/kgMS, a drop of $1/kgMS from its initial forecast.

Fonterra opened the season’s milk price forecast with a wide range of $8 to $11/kgMS but maintained a forecast milk price of $10. In August it narrowed the range to $9 to $11/kgMS and retained a mid-point of $10/kgMS.

However, the strong milk price triggered a boost in milk production around the world.

Last month, Fonterra adjusted the price range - $9 to $10/kgMS with a mid-point of $9.50/kgMS.

In its announcement today, Fonterra says rising milk production has forced another adjustment.

CEO Miles Hurrell says that with half the season still to complete, they continue to experience strong milk flows both in New Zealand and globally, particularly out of the United States and Europe.
“This continues to put downward pressure on global commodity prices.

“Combined with a rising New Zealand dollar since the last milk price update in November, we are required to further adjust the forecast range for the season and lower our midpoint.

“We started the season with a wide forecast range of $8.00-$11.00 per kgMS and the new midpoint of $9/kgMS remains within that range.

“We remain committed to maximising returns for farmer shareholders through both the Farmgate Milk Price and earnings, strong customer relationships and a firm focus on margins, product mix, and operational efficiencies,” says Hurrell.

The final Global Dairy Trade (GDT) auction for the year delivered bad news for dairy farmers.

The GDT price index recorded its ninth consecutive decline, confirming a glut in global milk supply.

This week’s auction saw the GDT price index falling 4.4% compared to the previous event. Whole milk powder price, which largely determines the farmgate milk price paid to farmers, fell 5.7% to US$3161/metric tonne, at its lowest point since August 2024. Just over six months ago, WMP price was hovering around US$4374/MT.