Milk Glut Drags Fonterra Forecast Down to $9.20/kgMS
A milk glut around the world shows no sign of easing, putting downward pressure on farmgate milk prices for the next few months.
Although the rise in whole milk powder (0.3%) and the overall index (0.4%) were modest compared to the last auction, it heralds further good news for farmers.
ASB economist Nathaniel Keall says its milk forecast remains at $6.75/kgMS for the 2020-21 season.
“We now believe the downside risks to this forecast have receded, and the risks are, if anything, moving ever so slightly towards the upside after three decent auctions,” he says.
Keall notes that Fonterra has also revised its forecast range, lifting the mid-point to $6.80, but keeping a wide forecast range of $6.30- $7.30.
“Fonterra have cited improving demand in China as a driver for the lift in its forecast, and indeed the ‘North Asia’ region has been strong over recent auctions,” he says.
Key Results
AMF index down 0.5%, average price US$4,110/MT
Butter index up 3.3%, average price US$3,678/MT
BMP not offered
Ched index up 3.0%, average price US$3,803/MT
LAC index down 8.0%, average price US$1,087/MT
SMP index down 0.2%, average price US$2,851/MT
SWP index not available, average price not available
WMP index up 0.3%, average price US$3,037/MT
