Fonterra Reduces Milk Price Forecast Amid Global Supply Increase
Fonterra, a leading global dairy cooperative, has announced a reduction in its milk price forecast for the current season. The revised forecast range is now $8.50 to $9.50 per kilogram of milk solids (kgMS), with a mid-point of $9 per kgMS. This represents a $1 reduction from the initial mid-point forecast of $10 per kgMS.
The decision to lower the forecast comes as global milk production remains robust, particularly in key regions such as the United States and Europe. According to CEO Miles Hurrell, "This continues to put downward pressure on global commodity prices."
In November, Fonterra had already adjusted its forecast range to $9 to $10 per kgMS, with a mid-point of $9.50 per kgMS, highlighting the volatility in global dairy markets.
The company's decision is also influenced by the rising New Zealand dollar, which affects the competitiveness of its exports. Fonterra emphasizes its commitment to maximizing returns for farmer shareholders through strategic management of milk prices and operational efficiencies.
Additionally, the latest Global Dairy Trade (GDT) auction has confirmed the challenging market conditions, with the GDT price index recording its ninth consecutive decline. The index fell by 4.4% compared to the previous event, and the price of whole milk powder, a key determinant of the farmgate milk price, dropped by 5.7% to $3,161 per metric tonne.
This price is the lowest since August 2024, reflecting the oversupply in the global market. Just over six months ago, the price for whole milk powder was significantly higher, at around $4,374 per metric tonne.
