Fonterra increases milk price and cuts production forecast

Published 25 September 15

NZ processor Fonterra has increased its 2015/16 forecast farmgate milk price by around a fifth, taking it to around 14ppl (NZ$4.60 per kilo of milk solids). The price uplift follows recent increases at the Global Dairy Trade auction.

Fonterra has also lowered its 2015/16 milk production forecast further, from 2-3% below last season to more than 5% down on 2014/15. The fall is due to lower cow numbers, reduced supplementary feeding and challenging weather conditions across much of NZ.

However, despite signs global supplies could be easing, Fonterra warned that an increase in demand would be needed in order for prices to continue to rise.

In addition, the co-op is discontinuing its farmer milk price risk management tool, the Guaranteed Milk Price Scheme. The scheme will finish at the end of the 2015/16 season, as Fonterra reports it did not have widespread support from farmers.