Product mix based on profitability
Despite high fat prices it is now more profitable for Fonterra to make whole milk powder than butter and skim milk powder, co-op chairman John Wilson says.
Chairman John Wilson says the strong opening milk price would be very welcome news for the cooperative’s farmers as they look ahead to the new season.
“What we are seeing is a continued positive global supply and demand picture which gives us the confidence to increase our current forecast Farmgate Milk Price into the new season.
“Demand is expected to remain strong – especially from China and for butter and AMF. We are expecting the global dairy market’s current prices, especially for fats, to continue throughout the new season.”
Fonterra is forecasting New Zealand 2018-19 milk collections to be 1,525 million kgMS, a 1.5% increase on current forecast for this season.
The co-op expects to see a lift in supply from the EU, US, Australia and Argentina, says Wilson.
“We will announce our forecast earnings per share for the 2019 financial year in July as normal. This, along with our forecast Farmgate Milk Price, comprises the total available for payout to our farmers.”
Fonterra is required under the Dairy Industry Restructuring Act to announce its forecast Milk Price at the beginning of each season, which starts on 1 June.
