Fonterra has increased its farm gate milk price forecast to NZD 8.50 per kilogram, reflecting higher Global Dairy Trade auction prices. The cooperative also adjusted its advance rate to support farmers’ cash flow and is expected to report strong earnings for FY24.
In response to recent increases at the Global Dairy Trade (GDT) Auction, Fonterra, the prominent New Zealand dairy cooperative, has adjusted its farm gate milk price forecast. This adjustment reflects positive trends in global dairy markets and aims to support local dairy farmers with improved financial returns.
Price Adjustment Details
Fonterra has raised its farm gate milk price forecast by 50 cents to NZD 8.50 per kilogram of milk solids for the current season. This increase follows a notable rise in the average price at the GDT, which saw a 5.5 percent increase to USD 3920 per tone (NZD 6495 per tone) on Wednesday. The price of whole milk powder, a critical factor influencing farmer payouts, rose by 7.2 percent to USD 3482 per tone.
Forecast and Financial Impact
Despite the upward adjustment, Fonterra has maintained a broad forecast range for the farm gate milk price, estimating between NZD 7.75 and NZD 9.25 per kilogram. This range reflects the variability in global dairy markets and potential future price changes.
In addition to the price forecast adjustment, Fonterra has updated its advance rate schedule, which will result in farmers receiving a larger portion of the FY25 forecast farm gate milk price earlier in the season. Specifically, farmers will be paid 10 percent more from December to January compared to previous seasons, providing crucial support for on-farm cash flow.
Financial Performance and Outlook
Fonterra’s Chief Executive, Miles Hurrell, highlighted that the cooperative’s strong performance in FY24 positions it well for a solid full-year dividend. The cooperative anticipates its FY24 earnings will be at the top end of the projected range of NZD 0.60 to NZD 0.70 per share. The final earnings and full-year dividend will be confirmed when Fonterra reports its financial results in September.
Fonterra’s decision to raise the farm gate milk price is a response to favorable global dairy market conditions and is aimed at providing financial relief to local dairy farmers. By adjusting the forecast and advance payments, Fonterra is reinforcing its commitment to supporting the dairy sector and ensuring robust farm cash flows as the new season progresses.
