Fonterra Co-operative Group Ltd has today (Monday, February 12) increased its 2023/24 season forecast farmgate milk price, with the midpoint lifting by 30c.
The forecast farmgate milk price midpoint from New Zealand’s (NZ) largest dairy company has now risen to $7.80 (£3.78)/kg of milk solids, up from $7.50 (£3.64)/kgMS.
The forecast range for the season increases to $7.30-$8.30 (£3.54-£4.03)/kgMS, up from $7.00-$8.00 (£3.39-£3.88)/kgMS.
The chief executive of Fonterra Co-operative Group Ltd, Miles Hurrell said this rise is owed to various “strong” global dairy trade events.
Hurrell said: “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 (Global Dairy Trade) prices.
The GDT price index increased by 4.2% at the latest trading event held last week on February 6.
It was the fifth consecutive increase and the index now stands at 1,106. A total of 24,836MT was sold at an average price of $3,571/MT.
Hurrell continued: “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 Fonterra chief executive said.
Fonterra’s forecast earnings guidance for FY24 of 50c-65c (0.24p-0.18c)/share remains unchanged.
The previous forecast farmgate milk price midpoint in December 2023 for the 2023/24 season went up by 25 cents to NZ$7.50 (£3.64)/kgMS, with the forecast range moving from NZ$6.50-$8.00/kgMS to NZ$7.00-$8.00 (£3.39-£3.88)/kgMS.
Fonterra
Fonterra recently announced it will install a 20-megawatt electrode boiler at its Edendale site in Southland in New Zealand.
The forecast $36 million investment in the electrode boiler will reduce the Edendale site’s emissions by around 20% or 47,500 tonnes of CO2 (carbon dioxide) per annum.
This is the equivalent of taking almost 20,000 cars off NZ roads, and will reduce Fonterra’s overall carbon emissions from its NZ 2018 baseline by nearly 3% per annum once operational, the NZ dairy company has said.
Fonterra chief operating officer Anna Palairet said: “With up to 15 million litres of milk being processed at our Edendale site each day, we need to ensure we have a secure energy supply that can meet processing demands.
“Cost is also an important consideration. Getting out of coal requires significant investment and we need to choose the best option that reduces emissions and operational complexity while also doing what’s best for our farmer shareholders,” Palairet added.
