Fonterra Whareroa sets cheese record, wins top award
Fonterra Whareroa wrapped up a successful season with a record-breaking cheese production volume and several gongs at the co-op's annual Best Site Cup awards.
Persistently strong global milk supply forced Fonterra to cut its milk price forecast last week by about 20-25 cents.
The season’s farmgate milk price range is now $6 - $6.30/kgMS — down from $6.25 - $6.50/kgMS. The co-op is maintaining its forecast earnings per share range of 25-35 cents.
It also confirmed it is negotiating to take back full ownership of the Darnum plant in Australia and is looking at selling Tip Top, although it wants it to remain a New Zealand business.
Fonterra chairman John Monaghan says the revision is due to the global milk supply remaining stronger relative to demand, which has driven a downward trend on the Global Dairy Trade (GDT) index since May.
“Since our October milk price update, production from Europe has flattened off the back of dry weather and rising feed costs. US milk volumes are still forecast to be up 1% for the year,” says Monaghan.
“Here in NZ we are maintaining our collections forecast of 1550 million kgMS. NIWA is saying it’s likely we will see an abnormal El Nino weather pattern over summer and this could impact our farmers’ milk production.
“Demand from China and Asia remains strong. However geopolitical disruption is impacting demand from countries that traditionally buy a lot of fat products from us.”
Fonterra chief executive Miles Hurrell says the latest forecast assumes demand will firm during the balance of the season, in line with predictions by other market commentators.
“Unknowns [persist] in the global demand and supply picture and we recommend farmers budget with ongoing caution. Fonterra’s advance rate has been set off a milk price of $6.15/kgMS.”
Fonterra’s first quarter gross margin of $646 million is down $14m versus the same period last year and up slightly on a percentage basis from 16.6% to 17%. Revenue of $3.8 billion is down 4% and sales volumes were down 6% to 3.6b liquid milk equivalent (LME).
The co-op’s ingredients business, despite lower sales volumes, performed solidly during the first quarter with a gross margin of $273m, up $28m on last year. The consumer business also performed well with a gross margin of $310m, up $10m on last year and volumes were up 5%.
Hurrell says the co-op generally makes a smaller proportion of its total annual sales in the first quarter. “This means the results from the first quarter do not give much insight into earnings performance for the full year.”
OPINION: Ministry for Primary Industries' situation outlook for primary industries report (SOPI) makes impressive reading.
Sheep and beef farmers Matt and Kristin Churchward say using artificial intelligence (AI) to spread fertiliser on their sprawling 630ha farm is a game changer for their business.
Commercial fruit and vegetable growers are being encouraged to cast their votes in the Horticulture New Zealand (HortNZ) board directors' election.
A unique discovery by a Palmerston North science company, Biolumic, looks set to revolutionise the value and potential of ryegrass and the secret is the application of ultraviolet (UV) light.
A New Zealand company is redefining the global collagen game by turning New Zealand sheepskin into a world-class health product.
With further extreme weather on the way, ANZ Bank is encouraging farmers and business owners impacted by the recent extreme weather and flooding to seek support if they need it.
OPINION: It's official, Fieldays 2025 clocked 110,000 visitors over the four days.
OPINION: The Federated Farmers rural advocacy hub at Fieldays has been touted as a great success.