Friday, 03 December 2021 08:45

Fonterra raises forecast milk price

Written by  Sudesh Kissun
Fonterra has raised its milk price to $8.40-$9/kgMS. Fonterra has raised its milk price to $8.40-$9/kgMS.

Fonterra farmers have received some good news this morning: a higher forecast milk price for this season.

The co-operative has lifted its 2021-22 forecast farmgate milk price range to $8.40 - $9.00/kgMS, up from $7.90 - $8.90/kgMS.

The midpoint of the range, which farmers are paid off goes up 30c to $8.70/kgMS.

However, the higher milk price is eroding profits from the co-op’s value added business.

Fonterra has revised its earnings guidance to 25-35c/share from 25-40c/share.

Fonterra chief executive Miles Hurrell says the lift in forecast milk Price range is good news and is an important boost to New Zealand communities.

With a midpoint of $8.70/kgMS, it would contribute more than $13.2 billion to the New Zealand economy.

“It’s the result of consistent strong demand for dairy at a time of constrained global supply,” says Hurrell.

“We’ve seen the impact of a number of events play out this first quarter. That includes the high price of feed in the US which has seen milk production growth stall and a lower-than-expected supply picture in Europe.”

Fonterra’s New Zealand milk supply is down around 3% on this time last season.

“While we expect that milk supply will be less than last season’s 1,539 million kgMS, the improving weather conditions and forecast milk collections for the balance of this season that are generally on par with last season support our current season forecast of 1,525 million kgMS,” says Hurrell.

“While we’ve seen demand soften slightly in China, global demand remains strong, and we think that will remain the case for the short to medium term.

“A higher forecast Farmgate Milk Price at this level can put pressure on our margins and therefore our earnings, which is why we’ve reduced the top end of our earnings guidance.”

More like this

Chinese strategy

OPINION: Fonterra may have sold its dairy farms in China but the appetite for collaboration with the country remains strong.

LCAs tackle false narratives

The quest to measure, report and make sense of the energy that goes into food production has come a long way in the past 25 years.

$3b windfall?

Fonterra's proposed sale of its global consumer business could fetch over $3 billion but not all proceeds will end up in the pockets of farmer shareholders.

Featured

SIDE 2025's new schedule, venue

Annual farmer gathering, the South Island Dairy Event (SIDE), is set to make history as it heads to Timaru for the first time.

Taranaki piggery goes solar

Installing 400 solar panels at their Taranaki piggery and cropping operation will have significant environmental, financial and animal welfare benefits for the Stanley family.

Editorial: Keep FTAs coming

OPINION: The dairy industry will  be a major beneficiary of a new free trade deal between NZ and the Gulf Co-operation Council (GCC).

Sharemilker completes the trifecta

The major winners in the 2024 West Coast/Top of the South Share Farmer of the Year award, Michael and Cheryl Shearer were happy to complete the trifecta.

National

Food charity to hold online auction

Meat the Need, New Zealand’s dedicated charity delivering locally sourced protein meals to food-insecure communities, is launching an online National…

Machinery & Products

An ideal solution for larger farms

Designed specifically for large farms that want to drill with maximum flexibility, efficiency and power, the new Lemken Solitair ST…

Landpower increases its offering

Landpower and the Claas Harvest Centre network will launch the Claas Scorpion and Torion material handling solutions to the market…

» Latest Print Issues Online

The Hound

Leaky waka

OPINION: Was the ASB Economic Weekly throwing shade on Reserve Bank governor Adrian Orr when reporting on his speech in…

Know-it-alls

OPINION: A reader recently had a shot at the various armchair critics that she judged to be more than a…

» Connect with Rural News

» eNewsletter

Subscribe to our weekly newsletter