Print this page
Friday, 03 December 2021 08:45

Fonterra raises forecast milk price

Written by  Sudesh Kissun
Fonterra has raised its milk price to $8.40-$9/kgMS. Fonterra has raised its milk price to $8.40-$9/kgMS.

Fonterra farmers have received some good news this morning: a higher forecast milk price for this season.

The co-operative has lifted its 2021-22 forecast farmgate milk price range to $8.40 - $9.00/kgMS, up from $7.90 - $8.90/kgMS.

The midpoint of the range, which farmers are paid off goes up 30c to $8.70/kgMS.

However, the higher milk price is eroding profits from the co-op’s value added business.

Fonterra has revised its earnings guidance to 25-35c/share from 25-40c/share.

Fonterra chief executive Miles Hurrell says the lift in forecast milk Price range is good news and is an important boost to New Zealand communities.

With a midpoint of $8.70/kgMS, it would contribute more than $13.2 billion to the New Zealand economy.

“It’s the result of consistent strong demand for dairy at a time of constrained global supply,” says Hurrell.

“We’ve seen the impact of a number of events play out this first quarter. That includes the high price of feed in the US which has seen milk production growth stall and a lower-than-expected supply picture in Europe.”

Fonterra’s New Zealand milk supply is down around 3% on this time last season.

“While we expect that milk supply will be less than last season’s 1,539 million kgMS, the improving weather conditions and forecast milk collections for the balance of this season that are generally on par with last season support our current season forecast of 1,525 million kgMS,” says Hurrell.

“While we’ve seen demand soften slightly in China, global demand remains strong, and we think that will remain the case for the short to medium term.

“A higher forecast Farmgate Milk Price at this level can put pressure on our margins and therefore our earnings, which is why we’ve reduced the top end of our earnings guidance.”

More like this

China lockdowns hit dairy demand

Covid restrictions in China are likely to slightly dampen milk powder imports into that country, according to Stefan Vogel, Rabobank research general manager for Australia and New Zealand.

Fonterra reforms greenlit

Fonterra's new capital structure is likely to sail through the parliamentary process without any major changes.


FMD scare puts NZ on watch

A recent outbreak of Foot and Mouth disease (FMD) in Indonesia has the NZ agriculture sector and its officials on…

Public round up on glyphosate

The country's environmental regulator agency has released the public feedback it has received on the glyphosate weed killer - commonly…

New bee Guy!

Former Agriculture Minister Nathan Guy will take over as the independent chair of Apiculture New Zealand (ApiNZ).

Machinery & Products

A new approach to apprenticeships

By taking a new approach to its apprenticeship programme, agricultural equipment supplier Norwood says it is ensuring farmers’ machinery will…

Buck-Rake does the job

With many self-propelled forage harvester manufacturers offering machines hitting 1000hp, the bottleneck in any harvesting system is always likely to…