Why Fonterra accepted defeat in the dairy aisle
OPINION: Fonterra's sale of its consumer dairy business to Lactalis is a clear sign of the co-operative’s failure to compete in the branded consumer market.
The co-op says the price range will narrow as the season progresses. The 2019/20 advance rate schedule has been set off $6.75/kgMS.
Chairman John Monaghan says this is a realistic opening forecast.
“We are having to look out more than a year into the future which is difficult, but what the information available is continuing to show us is that demand remains strong across key trading partners and this is reflected in GDT prices.
“We are giving farmers a wide range for the opening forecast milk price. It will be narrowed as the season goes on.”
Weather plays a significant role in determining global milk volumes, and therefore price.
Fonterra is forecasting New Zealand collections to be 1,520 million kgMS for the new season, up slightly on the current season.
However, Monaghan says there’s “still a lot of water to go under the bridge before we’ll have a clear view of what the season holds for both our co-op’s production and global dairy supply”.
Fonterra has also narrowed its 2018-19 forecast Farmgate Milk Price range by 20 cents to $6.30 - $6.40/kgMS.
This reflects favourable foreign exchange movements but slightly weaker than expected pricing for whole milk powder and skim milk powder.
The co-op has now contracted the majority of its farmers’ milk for the current season and has greater certainty on the likely closing Farmgate Milk Price. This is also reflected in the tighter forecast range, it says.
