Fonterra lifts milk price forecast

The news: New Zealand dairy giant Fonterra has lifted its milk price forecast for the 2023/24 season, citing weaker supply and improved demand dynamics.

The numbers: The company now expects prices to be between NZD6.50 and NZD8.00 per kgMS, with a mid-point of NZD7.25 ($6.80), a 50 NZ cents improvement from the mid-point of its previous range of NZD6.00 to NZD7.50 outlined last month.

The context: The dual-listed Fonterra, one of New Zealand's largest companies, is forecasting milk collections in the country to be slightly below last season, while aggregate milk growth in key export countries is also expected to be below average for FY24. In addition, the El Niño weather pattern may have further impacts on supply. “On the demand side, we have seen increases in recent Global Dairy Trade events. While this has been encouraging, it is not yet clear whether the stronger demand from China will be sustained. For other key regions, customers remain relatively cautious in terms of their forward purchases,” CEO Miles Hurrell said.