Fonterra Co-operative Group has revised its forecast for farmgate milk prices, citing an improvement in the outlook for dairy supply and demand. The cooperative now expects a farmgate milk price ranging from NZ$6.50 to NZ$8.00 per kilogram of milk solids, with a midpoint of NZ$7.25 representing a 50 New Zealand cent increase.
According to Chief Executive Miles Hurrell, the forecast takes into account a slight decrease in collections in New Zealand, as well as below-average milk growth in key export countries for FY 2024. The El Niño weather pattern may also have additional impacts on supply, potentially influencing buyer sentiment.
Hurrell also noted the recent positive results at the GlobalDairyTrade auction, where whole milk powder prices rose by 4.8% and skim milk powder prices increased by 6.6%. However, he cautioned that it is still uncertain whether the stronger demand from China will be sustained, while customers in other key regions continue to be relatively cautious with their forward purchases.
In conclusion, Fonterra's decision to raise its farmgate milk prices reflects a more favorable outlook for dairy supply and demand. While the recent auction results and potential demand from China are encouraging, there remains some uncertainty in the market.
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