Fonterra Co-operative Group has right this moment (Monday, October 9) elevated its farmgate milk worth forecast on the again of improved demand for milk and weaker provides.
New Zealand’s largest dairy firm raised the 2023/24 season forecast farmgate milk worth vary to NZ$6.50 – $8.00 (€3.68-€4.53) per kilogram of milk solids (MS).
The co-op introduced a brand new midpoint of NZ$7.25/kgMS, which is up 50 cents from the earlier forecast.
Fonterra chief government Miles Hurrell mentioned that the improved outlook displays each provide and demand dynamics.
“Right here in New Zealand we’re forecasting collections to be barely beneath final season, whereas combination milk progress in key export international locations is predicted to be beneath common for FY24 [full year 2024].
“The El Nino climate sample could have additional impacts on provide, and this may very well be driving current purchaser sentiment,” he mentioned.
“On the demand aspect, we’ve seen will increase in current World Dairy Commerce (GDT) occasions. Whereas this has been encouraging, it’s not but clear whether or not the stronger demand from China might be sustained.
“For different key areas, clients stay comparatively cautious by way of their ahead purchases,” Hurrell added.
The Fonterra chief government warned that it’s nonetheless “early days” in the case of the quantity of its 2024 gross sales guide that the co-op has contracted.
“We nonetheless face vital publicity to volatility in commodity costs.
“Trade charge volatility is one other issue to bear in mind. Our international change hedging technique is designed to assist reduce the affect of this, and in addition helps the next advance charge degree than could be attainable with out hedging.
“We’ll proceed to let our farmers and the market know as quickly as we will after we suppose issues have materially shifted,” Hurrell mentioned.
Final month, Fonterra Co-operative Group reported a revenue of NZ$1.6 billion – up 170% – for the monetary yr to July 31, 2023.
The co-op, owned by 9,000 farmers, additionally reported a closing 2022/23 season farmgate milk worth of NZ$8.22/kgMS.
It additionally reported full-year milk collections of 1,480 million kgMS .