Fonterra lifts forecast NZ farmgate milk price NZ50 cents/kg MS

The giant co-operative announced on Monday, October 9, a NZ50 cents a kilogram milk solids lift to a midpoint of $NZ7.25/kg MS.

The forecast milk price range is $NZ6.50 to $NZ8/kg MS.

The increase follows a third consecutive increase at the Global Dairy Trade (GDT) auction on October 3.

The GDT price index lifted 4.4 per cent at that auction, following a 4.6pc increase at the September 21 event and a 2.7pc increase at the September 5 event.

Prices plummeted earlier in the season, with whole milk powder prices falling 18pc in August to their lowest levels in five years.

This prompted Fonterra to slash its forecast farmgate price twice in August.

Fonterra chief executive officer Miles Hurrell said the now improved outlook reflected both supply and demand dynamics.

NZ forecast milk collection was slightly below last season.

Milk supply growth in key export countries was expected to be below average in 2023-24, and the El Nino weather pattern could also hit supply.

"This could be driving recent buyer sentiment," Mr Hurrell said.

But he warned although the GDT results were encouraging, it was not yet clear whether the stronger demand from China would be sustained.

"For other key regions, customers remain relatively cautious in terms of their forward purchases," he said.

Fonterra still faced significant exposure to volatility in commodity prices and exchange rates.

"We'll continue to let our farmers and the market know as soon as we can when we think things have materially shifted," Mr Hurrell said.

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