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Softening global demand for milk has led Fonterra to downgrade its 2022-23 forecast milk price.
The co-operative today announced a new forecast milk price range of $8.20 to $8.80/kgMS, with a midpoint of $8.50/kgMS.
Its previous forecast price ranged from $8.50 to $9.50/kgMS, with a midpoint of $9.
Fonterra chief executive Miles Hurrell says the revised forecast milk price range reflects softened demand at a time of balanced supply.
“Demand for whole milk powder, particularly from Greater China, has been soft with prices down around 5% since the beginning of December,” he says.
“While we are encouraged by recent increased buying behaviour from China, it is too soon to determine the extent of the impact this may have on the rest of the season.
“We also remain cautious given a soft economic growth outlook in many regions globally.”
The co-op has also revised its milk collection for the season to 1,465 million kgMS, down from its previous forecast of 1,480 million kgMS.
While Fonterra’s collections for the season are up on this time last year, Cyclone Gabrielle and dry conditions in the South Island have impacted the co-op’s full season expectations.
“Globally, milk supply from key exporting regions is balanced,” says Hurrell.
“Production from Europe and the US is up on last year, but this is partly offset by lower collections in New Zealand, Australia and Latin America.
“The medium to long term outlook for dairy, in particular New Zealand dairy, looks positive. We are assessing our position for next season and will provide our opening forecast in May,” says Hurrell.
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