Fonterra shaves 50c off forecast milk price
Fonterra has dropped its forecast milk price mid-point by 50c as a surge in global milk production is putting downward pressure on commodity prices.
Last year the co-op hit the milk peak on October 22, collecting 87 million litres. As Dairy News went to print last Thursday the co-op was expecting a much lower peak this season.
Fonterra chairman John Wilson says the weather over the North Island “has absolutely taken the top of our peak this year”.
“I feel for our people -- the farmers, sharemilkers and farm workers… they are dealing with really tough conditions.
“Rain is good, it makes grass grow, but it makes farming very hard work; some farms are literally under water and it’s knocking production around.”
Fonterra is expected this week to announce its peak production figures, highlighting the impact of bad weather.
The co-op’s Global Dairy Update reported late last month that milk collection for all New Zealand reached 96 million kgMS in August, 5% lower than August last season. For the three months to August 31 milk collection reached 122 million kgMS, 4% behind the same period last season.
The North Island milk collection in August reached 71 million kgMS, 6% behind August last season. South Island milk collection in August reached 25 million kgMS, 1% behind August last season.
Wilson says milk production in key world dairying regions has dropped. Global dairy prices have moved up and down after a series of solid rises, he says.
While markets are consolidating, volatility remains the norm.“Volatility is never going to leave this market; what we are seeing is the market continuing to come into balance.”
Global dairy prices rose slightly in last week’s Global Dairy Trade (GDT) auction. The flagship whole milk powder price index was up 2.9%, to US$2760/tonne.
The GDT price index rose 1.4% at the latest auction, following a 3% cent dip in the previous auction which ended a run of price increases. WMP prices had dipped 3.8% in the previous auction.
Analysts say the latest price rise could be attributed to supply concerns about NZ.
