Fonterra (FSF) has lifted its forecasted price range for Farmgate milk due to strong demand, mainly from China.
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CEO, Miles Hurrell Source: NZ Herald

The dairy giant lifted its forecast range to NZ$7.30 to NZ$7.90 (around A$6.80 to A$7.35) per kilogram of milk solids.

The midpoint of the range, at which farmers are paid off, has increased to NZ$7.60 (A$7.06) per kilogram of milk solids.

Notably, the Global Dairy Trade prices have continued to increase since February.

On the market this afternoon, Fonterra is up 1.47 per cent and is trading at $4.82 per share.

Fonterra (FSF) has lifted its forecasted price range for Farmgate milk due to strong demand.

The dairy giant lifted its forecast range to NZ$7.30 to NZ$7.90 (A$6.80 to A$7.35) a kilogram of milk solids. This is up from the previously announced NZ$6.90 to NZ$7.50 (approximately A$6.40 to A$7).

Notably, the midpoint of the range, which farmers are paid off, has increased to NZ$7.60 (around A$7.06) per kilogram of milk solids.

The lift in prices is from the consistent strong demand for New Zealand dairy. The Global Dairy Trade prices have continued to increase since February.

“It’s very much a China demand led story but there is also good demand for New Zealand dairy across South East Asia and the Middle East,” CEO Miles Hurrell said.

“China’s strong economic recovery, following the initial impact of COVID-19, is flowing through to strong demand for dairy and we’ve seen this through sales during the Chinese New Year,” he added.

Miles believes the price lift is good news for New Zealand farmers and the wellbeing of rural communities. It would see the co-op contribute more than $11.5 billion to the country’s economy through milk price payments this year.

Dairy products and, in particular, grass-fed products are performing strongly post-covid in overseas markets.

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