New Zealand’s largest dairy company, the Fonterra Co-operative Group, has reduced down its 2023/24 season milk price forecast for the second time this month.
Fonterra said today (Friday, August 18) that it had to revise down its farmgate milk price from earlier this month because Global Dairy Trade (GDT) prices had continued to fall.
“This is a challenging time for New Zealand’s dairy farmers and the co-op is doing all it can to support its farmers,” Fonterra’s chief executive Miles Hurrell said today.
The chief executive of the global dairy nutrition co-op, owned by 9000 farmers, pointed to the fall in whole milk powder prices in the latest GDT trading event.
Miles Hurrell added: “GDT prices have fallen sharply since we released our opening forecast for the season in May, with the overall index down 16% over that period.
“While our wide forecast range assumed movement in GDT prices, whole milk powder prices fell 10.9% in the most recent trading event requiring us to revise our position again.”
According to the chief executive of Fonterra reduced demand from key importing regions for whole milk powder has continued to “weigh on prices”.
“While indications are demand will start to return over the second half of FY24, we do expect the pace of demand growth to be subdued relative to initial expectations.
“In the meantime, we will continue to respond to market signals and adjust our forecast farmgate milk price to ensure that the impact of current prices and currency movements is transparent,” Hurrell added.
Fonterra today confirmed that it has cut its milk price for 2023/24 from $6.25 – $7.75 per kilograms of milks solids (kgMS), with a midpoint of $7.00 per kgMS, to $6.00 – $7.50 per kgMS with a midpoint of $6.75 per kgMS.
The Global Dairy Trade (GDT) index has seen a significant fall of 7.4% following the latest trading event (Tuesday, August 15).
The index figure now stands at 850, the lowest index figure since November of 2018.
A total of 33,580MT of product was sold at the latest event at an average price of $2,875/MT.
Out of the products that were offered at event, whole milk powder (WMP) took the biggest hit, with that sub-index plunging by 10.9%, reflecting an average price of $2,548/MT.