Fonterra reduce milk price to lowest level in eight years

Published 30 April 15

Fonterra has reduced its forecasted farmgate milk price for the 2014/15 season from $4.70/kilograms milk solids (kgMS) to $4.50/kgMS (17ppl equivalent). This is the lowest milk price paid by the cooperative in the past eight seasons and has been attributed to the continuing volatility in dairy commodity prices caused by over-supply.

Fonterra has also revised its estimate of NZ milk production for the 2014/15 season from a fall of 2.1% to 1.3% growth. This is a swing of around 700m litres meaning production would finish the season at roughly 21 billion litres. The change is due to improved grass growth conditions on farm and could mean higher volumes on upcoming GlobalDairyTrade auctions, potentially putting further pressure on prices.