The reduced import demand for whole milk powder from greater China prompted New Zealand’s largest dairy company, the Fonterra Co-operative Group, today (Friday, August 4) to revise down its milk price forecast for the 2023/2024 season.
The chief executive of the global dairy nutrition co-op, owned by 9000 farmers, said that the revised forecast farmgate milk price reflected the current market position.
“When we announced our opening 2023/24 season forecast farmgate milk price in May, we noted it reflected an expectation that China’s import demand for whole milk powder would lift over the medium-term.
“Since then, overall Global Dairy Trade (GDT) whole milk powder prices have fallen by 12%, and China’s share of whole milk powder volumes on GDT events has tracked below average levels,” he said.
Fonterra’s chief executive, Miles Hurrell, said this reflects” a current surplus of fresh milk in China, resulting in elevated levels of local production of whole milk powder, and reducing near-term whole milk powder import requirements”.
Milk price drop
Fonterra today confirmed that it has cut its milk price from $7.25 – $8.75 per per kilograms of milks solids (kgMS) with a midpoint of $8.00 per kgMS, to $6.25 – $7.75 per kgMS, with a midpoint of $7.00 per kgMS.
Hurrell however remained relatively upbeat despite today’s revised forecasts.
He said: “The medium to long term outlook for dairy, in particular New Zealand dairy, looks positive with milk production from key exporting regions flat compared to last year.”
GDT
The GDT Price Index fell back again by 4.3% after the latest auction event earlier this week (Tuesday, August 1).
The fortnightly GDT Price Index has mainly been in decline since March last year.
A total of 36,613MT of product was sold at the latest auction at an average price of $3,100/MT.
The index figure fell back by 41 points to 918 – the lowest index figure since September 1, 2020, when the index stood at 913.
In terms of decreases in sub-index, whole milk powder (WMP) saw the sharpest decline, dropping by 8% for a price of $2,864/MT.
Other products saw more marginal decreases.
The auction involved 124 winning bidders from 157 participating, across 20 bidding rounds.