Fonterra increases forecast farmgate milk price

Wednesday, 23 October 2019

Fonterra have announced an increase to its forecast farmgate milk price for the 2019/20 production season. The price has moved from $6.25-$7.25 to $6.55-$7.55 per kg milksolids (kgMS), with the advance rate Fonterra pays will be set off the midpoint at $7.05 per kgMS.

The co-operative reports it has been achieving good prices for dairy products so far this season, providing sufficient returns to support a higher payout. The widening of the forecast price range was put down to the uncertainties surrounding global dairy markets, including weather impacts on milk supplies.

Global dairy product prices have been supported by limited growth in global milk supplies. Particularly benefitting Fonterra’s returns will be higher prices for both WMP and SMP, as seen by price trends on the GDT auction . Milk powder prices have been pushed up by firm global demand and reduced production. The average price of SMP during 2019 has been higher than the last two years.

 

Jennie Tanner

Analyst - Dairy & Livestock

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