Fonterra has indicated that it would lower its expected Farmgate Milk Price range for the 2023/24 season.
According to the cooperative, the range will be reduced from $7.25 to $8.75/kgMS to $6.25 to $7.75/kgMS, with the midpoint dropping from $8.00 to $7.00/kgMS.
The news comes after the price of whole milk powder (WMP) fell 7.29% earlier this week on the Global Dairy Trade (GDT) auction platform, bringing WMP prices to their lowest level since early 2019.
According to Fonterra CEO Miles Hurrell, the updated pricing range reflects continuous lower import demand for whole milk powder from Greater China.
“When we announced our opening 2023/24 season forecast Farmgate Milk Price in May, we noted that it reflected our expectation that China’s import demand for whole milk powder would increase in the medium term,” Hurrell explains.
He claims that total GDT whole milk powder WMP prices have dropped 12% since then, with China’s portion of WMP volumes on GDT events following below-average levels.
“This reflects China’s current surplus of fresh milk, resulting in increased levels of local production of whole milk powder and a reduction in near-term whole milk powder import requirements.”
“The medium to long term outlook for dairy, particularly New Zealand dairy, looks positive, with milk production from key exporting regions flat compared to last year,” Hurrell adds.
