Fonterra Boosts Milk Price Forecast for Farmers: Midpoint Climbs to $7.80/kgMS

Fonterra Co-operative Group Ltd, New Zealand's largest dairy company, has increased its 2023/24 season forecast farmgate milk price. The new midpoint price is now $7.80 (£3.78)/kg of milk solids, up from $7.50 (£3.64)/kgMS. Consequently, the forecast range for the season has also risen to $7.30-$8.30 (£3.54-£4.03)/kgMS, an increase from the previous range of $7.00-$8.00 (£3.39-£3.88)/kgMS.

The Global Dairy Trade (GDT) price index saw a 4.2% increase at its latest trading event on February 6, marking the fifth consecutive increase. The index now stands at 1,106, with 24,836MT sold at an average price of $3,571/MT. Since December, overall GDT prices have increased by 10%, with whole milk powder prices up 11.5%.

Fonterra’s forecast earnings guidance for FY24 remains unchanged at 50c-65c (0.24p-0.18c)/share. The previous forecast in December 2023 for the 2023/24 season had a midpoint of NZ$7.50 (£3.64)/kgMS, with a range of NZ$6.50-$8.00/kgMS to NZ$7.00-$8.00 (£3.39-£3.88)/kgMS.

Fonterra recently announced a $36 million investment in a 20-megawatt electrode boiler at its Edendale site in Southland, New Zealand. This investment is expected to reduce the site's emissions by around 20%, equivalent to 47,500 tonnes of CO2 annually. This reduction is akin to taking almost 20,000 cars off NZ roads and will decrease Fonterra’s overall carbon emissions from its NZ 2018 baseline by nearly 3% annually once operational.