Fonterra Increases FY25 Forecast Farmgate Milk Price
Source: DairyNews.today
Fonterra Co-operative Group Ltd has announced a significant upward revision in its forecast Farmgate Milk Price midpoint for the 2024/25 season, raising it by 50 cents. The cooperative also revealed an increase in the FY25 Advance Rate Schedule and updated its FY24 earnings forecast, projecting earnings to hit the upper end of the previously announced range of 60-70 cents per share.
Fonterra CEO Miles Hurrell attributed these positive developments to the recent uplift in Global Dairy Trade (GDT) prices and the cooperative's strong balance sheet. "Since announcing our opening FY25 season forecast Farmgate Milk Price in May, GDT prices have improved. We've reflected this in our revised forecast range, with our midpoint lifting 50 cents to $8.50 per kgMS," Hurrell stated.
Despite the early stage of the season and the relatively small proportion of sales contracts in place, Fonterra has adjusted its forecast range to $7.75-$9.25 per kgMS, up from the previous range of $7.25-$8.75 per kgMS. This broader range reflects the inherent uncertainties in the market at this stage.
Hurrell also highlighted the improvements to the Advance Rate payment schedule, which will provide farmers with increased payments earlier in the season. "Our balance sheet strength has allowed us to make several enhancements to the Advance Rate schedule over the last two seasons," he said. The adjustments mean that farmers will receive 10% more of the FY25 forecast Farmgate Milk Price from December, paid in January, compared to previous seasons, helping to bolster on-farm cash flow during critical periods.
FY24 Earnings Outlook
Fonterra also updated its FY24 earnings forecast, indicating that earnings from continuing operations are expected to be at the top end of the 60-70 cents per share range. Hurrell noted, "As we look to close out the books for the year, it’s become clear that we have maintained strong performance across FY24. We’re indicating we expect our earnings to be at the top end of our forecast range, and this puts us on track for a strong full year dividend."
The cooperative's final FY24 earnings are still subject to the completion of financial statements and the audit process. Fonterra plans to confirm its final FY24 earnings and full-year dividend when it reports its financial results in September.
Despite the early stage of the season and the relatively small proportion of sales contracts in place, Fonterra has adjusted its forecast range to $7.75-$9.25 per kgMS, up from the previous range of $7.25-$8.75 per kgMS. This broader range reflects the inherent uncertainties in the market at this stage.
Hurrell also highlighted the improvements to the Advance Rate payment schedule, which will provide farmers with increased payments earlier in the season. "Our balance sheet strength has allowed us to make several enhancements to the Advance Rate schedule over the last two seasons," he said. The adjustments mean that farmers will receive 10% more of the FY25 forecast Farmgate Milk Price from December, paid in January, compared to previous seasons, helping to bolster on-farm cash flow during critical periods.
FY24 Earnings Outlook
Fonterra also updated its FY24 earnings forecast, indicating that earnings from continuing operations are expected to be at the top end of the 60-70 cents per share range. Hurrell noted, "As we look to close out the books for the year, it’s become clear that we have maintained strong performance across FY24. We’re indicating we expect our earnings to be at the top end of our forecast range, and this puts us on track for a strong full year dividend."
The cooperative's final FY24 earnings are still subject to the completion of financial statements and the audit process. Fonterra plans to confirm its final FY24 earnings and full-year dividend when it reports its financial results in September.
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