This has brought the forecast range for the 2023/24 season to NZ$7.30 - NZ$8.30. Meanwhile, the forecast earnings guidance has remained unchanged, at 50-65 cents per share.
“Recently, we’ve seen a lift in demand, primarily from the Middle East and South East Asia, for our reference commodity products and this has been reflected in GDT prices.
“Overall GDT prices are up 10% since our last Farmgate Milk Price update in December, with whole milk powder prices up 11.5% over the same period.
“Looking ahead, the potential impact of geopolitical instability and supply chain disruption on demand from key importing regions remains uncertain.”
“We can navigate these dynamics thanks to our scale and our diversification across markets, which provides us with optionality. We are also well placed to continue to get the Co-op’s product to customers through our partnership with Kotahi,” the CEO concluded.
Sustainable upward demand leads to third price increase in 5 months
Fonterra has nudged up its forecast farmgate milk price for a third time since October 2023, when the co-op lifted the range by 50 cents over improved supply and demand dynamics. The forecast price was lifted again in December, by 25 cents, when the co-op also reported strong earnings in Q1, its profits up 85% on the same period last year and an improved performance across its ingredients, foodservice and consumer sales channels.
August 2023 was the last time the co-op reduced the FY24 forecast milk price, which back then fell to $6.25 - $7.75 per kgMS, with a midpoint of $7.00 per kgMS as Fonterra blamed reduced import demand for whole milk powder from Greater China.