Friday, 22 March 2024 13:51

$8 milk price this season 'out of reach'

Written by  Sudesh Kissun
ASB economist Nathaniel Keall. ASB economist Nathaniel Keall.

An $8/kgMS farmgate milk price for this season may be out of reach, according to ASB economist Nathaniel Keall.

With just over two months left in the 2023-24 season and bulk of the season’s products prices, Keall expects little change to Fonterra’s mid-point of $7.80/kgMS. Releasing its half-year results yesterday, Fonterra narrowed its price range to $7.50-$8.10/kgMS but the mid-point remains unchanged.

Keall says Fonterra’s tweak reflects that we are increasingly close to the end of the season, and both upside and downside risks have dissipated.

“Mechanically, the bulk of the season’s product has been priced and the co-op has little further hedging to do.”

ASB’s forecast for the season has been sitting at around $8/kgMS since the beginning of the year, when Fonterra’s midpoint was $7.50/kgMS.

But Keall accepts that it looks like prices might not quite manage to hit that point, having run into resistance at the past couple of dairy auctions. That includes this week, where the overall Global Dairy Trade (GDT) index eased 2.8% and whole milk powder fell 4.2%.

Keall isn’t surprised to see WMP prices pare back some of their recent gains.

“We’ve long noted Chinese demand remains fairly muted and that we probably couldn’t expect South East Asian & Middle Eastern buyers to offset that forever. But we had thought prices might sustain these levels for long enough for the seasons price to hit the $8/kgMS.”

Keall says attention is now largely focused on the price dairy farmers can expect next season.

ASB is forecasting an opening forecast milk price of $8.30/kgMS. Fonterra is yet to come out with an opening forecast milk price for the next season.

More like this

Fonterra's in good shape

Fonterra released its interim results last month, showing a continuation of the strong earnings performance delivered by the co-op through the 2023 financial year. Here’s what Fonterra chair Peter McBride and chief executive Miles Hurrell said about the results…

China trade

OPINION: Last week's revelation that data relating to New Zealand MPs was stolen amid Chinese state-sponsored cyber espionage targeting two arms of the country’s Parliament could test the long-standing trade relations between the two countries.


Farmers fined for cattle abuse

A Waikato cattle farming family have been fined $23,000 for failing to provide sufficient food and care for their animals, resulting in more than half a dozen animal deaths.

App trial yields promising results

An initial trial of an app, funded by Beef + Lamb New Zealand, has demonstrated significant results in reducing drench inputs during a small-scale study.


Back to the tractor!

Alliance Group chair Murray Taggart is looking forward to spending more time on farm as he steps down after a…

Machinery & Products

PM opens new Power Farming facility

Morrinsville based Power Farming Group has launched a flagship New Zealand facility in partnership with global construction manufacturer JCB Construction.

AGTEK and ARGO part ways

After 12 years of representing the Landini and McCormick brands in New Zealand, Bay of Plenty-based AGTEK and the brands’…

100 years of Farmall Tractors

Returning after an enforced break, the Wheat and Wheels Rally will take place on the Lauriston -Barhill Road, North-East of…

» Latest Print Issues Online

The Hound


OPINION: Your canine crusader was truly impressed by the almost unanimous support given by politicians of all stripes in Parliament…


OPINION: As this old mutt suggested in the last issue, MPI looks a very good candidate for some serious public…

» Connect with Rural News

» eNewsletter

Subscribe to our weekly newsletter