Fonterra Increases Milk Price Forecast Amid Global Commodity Improvements

Fonterra Co-operative Group has announced a revision in its forecast milk price, raising the midpoint to $9.50 per kilogram of milk solids (kgMS). This adjustment marks a return to the price level seen in November and reflects an improved outlook for global dairy markets.

The upd ated forecast range is now se t between $9.20/kgMS and $9.80/kgMS, compared to the previous range of $8.50/kgMS to $9.50/kgMS. Fonterra's chief executive, Miles Hurrell, attributed the changes to recent improvements in global commodity prices and the cooperative's well-contracted sales book.

Hurrell stated that Fonterra's ability to make these changes is supported by favorable market conditions and the cooperative's strong sales commitments. These developments have led to a more optimistic outlook for the remainder of the financial year.

Fonterra's decision comes as dairy prices are experiencing a rebound, with the fourth consecutive increase in the Global Dairy Trade (GDT) index, which saw a rise of 3.6%. This trend in the GDT index supports the cooperative's revised price forecast.

The cooperative's actions reflect its ongoing strategy to maximize returns for its shareholders, which include the payout of all earnings from the Mainland Group this year, indicating a robust financial position.