Milk Glut Drags Fonterra Forecast Down to $9.20/kgMS
A milk glut around the world shows no sign of easing, putting downward pressure on farmgate milk prices for the next few months.
The cooperative says the range will reduce from $7.25 - $8.75/kgMS to $6.25 - $7.75/kgMS, which means the midpoint will drop from $8.00/kgMS to $7.00/kgMS.
The announcement comes after the whole milk powder (WMP) price tumbled 7.29% on the Global Dairy Trade (GDT) auction platform earlier this week, taking WMP prices to their lowest level since early 2019.
Fonterra chief executive Miles Hurrell says the revised price range reflects ongoing reduced import demand for whole milk powder from Greater China.
“When we announced our opening 2023/24 season forecast Farmgate Milk Price in May, we noted it reflected an expectation that China’s import demand for whole milk powder would lift over the medium-term,” says Hurrell.
He says that, since then, overall GDT whole milk powder WMP prices have fallen 12%, with China’s share of WMP volumes on GDT events tracking below-average levels.
“This reflects a current surplus of fresh milk in China, resulting in elevated levels of local production of whole milk powder, and reducing near-term whole milk powder import requirements.
“The medium to long term outlook for dairy, in particular New Zealand dairy, looks positive with milk production from key exporting regions flat compared to last year,” says Hurrell.
