New Zealand dairy giant Fonterra said the Chinese market continues to make a strong recovery from COVID-19 with Chinese dairy buyers driving the recent price increases at the GDT auction.

Announcing a first quarter update, Fonterra CEO Miles Hurrell said the co-op was seeing good demand in export markets and had increased its milk price forecast to $6.70 to $7.30/kg of milk solids, which equates to a range of 29c to 31.6c/litre in Irish milk price terms.

“Sales volumes are in line with the same period last year, which was before we felt the impact of COVID-19. This reflects strong demand for dairy. Our food service business in China has been the stand-out performer so far as demand for dairy in China continued to recover strongly from COVID-19,” said Hurrell.

Fonterra said its underlying profits for the first quarter of its 2020/21 financial year were up 40% to $250m (€145m). The co-op recently completed the sale of its struggling China farms business for NZ$555m (€320m), which it will use to pay down debt.