Fonterra's record forecast organic milk price
Fonterra has announced a record forecast opening organic milk price of $12.30/kgMS for the new season.
The country's second-largest milk processor has revised its forecast milk payout for the season as dairy prices soften.
Open Country Dairy wrote to suppliers last month adjusting its forecast milk payout for two settlement periods; for milk supplied between December and February the forecast price has dropped by 35c/kgMS and by 40c/kgMS for March-May supply next year.
The predicted settlement amount (forecast payout for the season) for both periods is $6.10 - $6.40/kgMS. OCD has not changed the advance rates to farmer suppliers.
OCD chief executive Steven Koekemoer told suppliers that the situation changed quickly over the last two months.
”At the last round of supplier meetings we saw global supply and demand tracking well together but had some uncertainty about the EU reaction to higher milk prices.
“What has happened since is a lift in supply of 4.3% in the EU recently and we forecast that it could continue at around 5% for the balance of quarter four.
“Based on the global developments we have decided to take the prudent approach and adjust our forecast. Major banks are sharing this view.
“Buyers are moving into a position where there may be a lack of urgency to purchase as they assess the impact of additional supply.”
Koekomoer says the last auction saw whole milk powder prices recover a little “which was a good sign and could see further improvement if New Zealand milk volumes continue to see butter taking a tumble from its record high prices and the index falling by 11% while the skim milk powder index increased by 4.7%”.
Last month, Fonterra shaved off 35c from its forecast payout, taking the milk price for the 2017-18 season from $6.75 to $6.40/kgMS.
But ASB Bank’s senior rural economist Nathan Penny said there was a “hint of conservativeness” in Fonterra’s revised payout.
ASB is sticking with its $6.50/kgMS forecast.
He points to Fonterra chairman John Wilson saying the lower forecast reflects a “prudent approach” to ongoing volatility in the global dairy market.
“You can see they have erred on the side of caution,” Penny told Rural News.
“Later they talk about how they have actually lifted the advance payments to farmers.
“So on the one hand they are saying they are being conservative, but on the other they are saying actually there’s a bit more underlying confidence by showing they are happy to lift those advanced payments.”
The CEO of Apples and Pears NZ, Karen Morrish, says the strategic focus of her organisation is to improve grower returns.
A significant breakthrough in understanding facial eczema (FE) in livestock brings New Zealand closer to reducing the disease’s devastating impact on farmers, animals, and rural communities.
Farmer co-operative LIC has closed its satellite-backed pasture measurement platform – Space.
OPINION: The case of four Canterbury high country stations facing costly and complex consent hearing processes highlights the dilemma facing the farming sector as the country transitions into a replacement for the Resource Management Act (RMA).
The 2024-25 season apple harvest has “well and truly exceeded expectations”, says Apples and Pears NZ chief executive Karen Morrish.
Through collaborative efforts with exhibitors, visitors, and industry partners, Fieldays says it is reaffirming its commitment to environmental responsibility with new initiatives for 2025.
OPINION: The Greens aren’t serious people when it comes to the economy, so let’s not spend too much on their…
OPINION: PM Chris Luxon is getting pinged lately for rolling out the old 'we're still a new government' line when…