Fonterra Co-operative Group has today (Monday, October 9) increased its farmgate milk price forecast on the back of improved demand for milk and weaker supplies.

New Zealand’s largest dairy company raised the 2023/24 season forecast farmgate milk price range to NZ$6.50 – $8.00 (€3.68-4.53) per kilogram of milk solids (MS).

The co-op announced a new midpoint of NZ$7.25/kgMS, which is up 50c from the previous forecast.


Fonterra chief executive Miles Hurrell said that the improved outlook reflects both supply and demand dynamics.

“Here in New Zealand we’re forecasting collections to be slightly below last season, while aggregate milk growth in key export countries is expected to be below average for FY24 [full year 2024].

“The El Nino weather pattern may have further impacts on supply, and this could be driving recent buyer sentiment,” he said.

“On the demand side, we have seen increases in recent Global Dairy Trade (GDT) events. While this has been encouraging, it is not yet clear whether the stronger demand from China will be sustained.

“For other key regions, customers remain relatively cautious in terms of their forward purchases,” Hurrell added.

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The Fonterra chief executive warned that it is still “early days” when it comes to the amount of its 2024 sales book that the co-op has contracted.

“We still face significant exposure to volatility in commodity prices.

“Exchange rate volatility is another factor to keep in mind. Our foreign exchange hedging strategy is designed to help lessen the impact of this, and also supports a higher advance rate level than would be possible without hedging.

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

Last month, Fonterra Co-operative Group reported a profit of NZ$1.6 billion – up 170% – for the financial year to July 31, 2023.

The co-op, owned by 9,000 farmers, also reported a final 2022/23 season farmgate milk price of NZ$8.22/kgMS.

It also reported full-year milk collections of 1,480 million kgMS .