Friday, 17 July 2020 09:08

China sales strong, helps Fonterra lift forecast milk price

Written by  Staff Reporters
Fonterra has announced a 25c lift in the mid-point of its 2020-21 forecast. Fonterra has announced a 25c lift in the mid-point of its 2020-21 forecast.

A buoyant Chinese market has triggered a lift in the 2020-21 forecast farmgate milk price.

Fonterra has announced a 25c lift in the mid-point of its 2020-21 forecast to $6.40/kgMS - the new range is $5.90 to $6.90/kgMS.

Fonterra chairman John Monaghan says the lift to the bottom end of the range was being predominantly driven by improved market conditions in China.

 “After an initial shock due to COVID-19, dairy consumption in China is recovering with more people spending on food. We’re seeing customers ramp up promotional activity as they look to catch up on the sales losses incurred over lockdown,” Monaghan says.

“Elsewhere, the EU and US Governments’ support measures for farmers are holding up milk production and dairy commodity prices despite the disruption they have experienced so far from COVID-19. While we expect these support measures to end at some point, it is likely they will continue through the peak of the New Zealand season.

“While there is still a high level of uncertainty in our global markets, we do see a lowering level of risk and this supports a decision to lift the bottom end of the price range.”

 The 2020-21 started June 1. Monaghan says it’s very early in the new season and the co-op is keeping a close eye on consumer demand and production from the key milk producing regions. 

Milk supply from the EU, US and Latin America is increasing despite the impact of COVID-19, and there continues to be uncertainty around how the global recession and the potential for a second wave of COVID-19 globally could impact demand.

Monaghan sys the co-op is advising its farmers to continue budgeting with caution.

Meanwhile the co-op has lowered its 2019-20 forecast milk price by 5c to a mid-point of $7.15/kgMS.

The co-op is blaming a strong NZ dollar for the small drop.

More like this

China keeps dairy prices high

Whole milk powder (WMP) prices are now sitting above pre-Covid-19 levels and New Zealand farmers can thank a resurging Chinese economy for that.

China back on track?

Life in China is starting to get back to some semblance of normality, according to MPI’s deputy director general of China Relations.

A ticking time bomb

Our dairy industry risks being exposed to a ‘ticking time bomb’ of unethical players unlawfully passing off New Zealand-made and packed milk powder products in China as supplements for babies.

MPI says it will act

MPI says it takes the claims made by Jane Li seriously and where it has evidence that exporters are not meeting their requirements, it will take action.

Featured

Water reforms come at a cost

The government’s new freshwater laws, signed off this week, have the potential to create significant unnecessary costs for ratepayers, farmers and entire communities, Federated Farmers says.

2020 harvest yields up

Final harvest data for wheat, barley and oats (milling/malting and feed) in 2020 show yields were up 17% overall across the six crops.

 

Difficult but the right call

DairyNZ chief executive Dr Tim Mackle says the joint decision three years ago to eradicate Mycoplamsa bovis was a difficult call.

Milking cluster milks runner-up award

DeLaval has come away with the runner up prize in this year’s Fieldays Online innovation competition with a new milking cluster that eliminates the need for conventional liner changes.

Glow worms to cows

Thomas Lundman's work focus has gone from tracking tiny critters in pitch black caves to looking after considerably larger animals in paddocks near Whakatane.

» Latest Print Issues Online

Milking It

A ticking timebomb?

There could be another dairy health scare brewing in China and this one starts in our backyard.

Please explain

Does anyone in the Government understand the essential role St John Ambulance has in our society?

» Connect with Dairy News

» eNewsletter

Subscribe to our weekly newsletter