Tuesday, 13 December 2022 08:55

Guidance range up, milk price down

Written by  Staff Reporters
Fonterra chief executive Miles Hurrell says the new earning guidance is a positive start to the year. Fonterra chief executive Miles Hurrell says the new earning guidance is a positive start to the year.

Fonterra last week lifted its earning guidance for this season but narrowed its forecast farmgate milk price due to softening whole milk powder prices.

The co-op's new earnings guidance is 50-70c/share, up from 45-60c. However, its forecast farmgate milk price range drops from $8.50-$10/kgMS to $8.50-$9.50/kgMS.

The new midpoint for the forecast milk price is $9/kgMS, a drop of 25c, but the co-op is holding its advance rate paid to farmers monthly for milk.

Fonterra chief executive Miles Hurell says it was a positive start to the year given the current global operating environment.

"We continue to feel the impact of geopolitical and macroeconomic events, with higher costs at every point in our supply chain.

"It's a similar story behind the farm gate with our farmer shareholders managing significantly higher input costs."

The co-op reports that globally, milk supply from key exporting regions is down over the last 12 months.

Production in Europe and Australia continues to be down, with US milk supply showing a slight improvement in recent months. In New Zealand, Fonterra's milk production is down 2.9% on the same point last season.

"Global market volatility has prompted some softening of demand for whole milk powder, particularly in Greater China, and this is reflected in our forecast farmgate milk price range," says Hurrell.

"We've seen increased participation from other regions, which has offset in part the drop in demand from Greater China. While it's still early in the financial year, we are happy with our sales contract rate."

Hurrell says the long-term outlook for dairy remains strong.

"There's no doubt that we're in a period of increased global uncertainty.

"Inflationary pressures are bing felt both on farm and across our business but looking further out, the fundamentals for dairy remain positive."

More like this

Featured

Pāmu farm opens gate to urban visitors

For many urban New Zealanders, stepping into Pāmu’s Pinta dairy farm near Taupo last month was the first time they had had the chance to experience farm life up close.

National

Machinery & Products

Gong for NH dealers

New Holland dealers from around Australia and New Zealand came together last month for the Dealer of the Year Awards,…

A true Kiwi ingenuity

The King Cobra raingun continues to have a huge following in the New Zealand market and is also exported to…

Data crucial to managing water

Watermetrics was formed as a water data collector and currently supplies and services modern technology such as flow meters, soil…

» Latest Print Issues Online

Milking It

Dairy power

OPINION: The good times felt across the dairy sector weren't lost at last week's Beef + Lamb NZ annual meeting.

» Connect with Dairy News

» eNewsletter

Subscribe to our weekly newsletter