Fonterra chairman, John Monaghan, said the change was in response to stronger milk supply signals coming from some of the world’s key dairy producing regions.
“Over the past quarter, we have seen increased milk supply out of markets including Europe, the US and Argentina. These regions have a big influence on the supply and demand balance and therefore global prices. For example, the one per cent increase in US milk production represents just under 100 million liters of extra milk,” Monaghan said.
“At the same time, demand for whole milk powder and dairy fats is showing signs of slowing in some parts of Asia, Africa and the Middle East.”
Fonterra CEO, Miles Hurrell, said the weakening NZD/USD exchange rate had only partially offset the decline in global dairy prices, and it was important to give farmers a realistic assessment of the market.
“It’s still very early in the season and a lot can change over the coming months. A drop in the new season Milk Price forecast will be frustrating to our farmers, but it’s important we give them the facts so they can make informed decisions in their farming businesses,” said Hurrell.
The update is in line with requirements for Fonterra to review the milk price every three months. The cooperative last considered the milk price in May.