New Zealand dairy giant Fonterra has cut its forecast milk price for the third time this season. Announcing a trading update for the first quarter of its 2018/19 financial year, Fonterra said it had cut its forecast milk price for the 2018/19 milking season to a new range of $6 to $6.30/kg of milk solids (MS).

In Irish terms, this equates to a milk price of between 25.5c/litre and 26.8c/litre.

Fonterra’s previous forecast for milk price, which was announced in early October, was a range of between $6.25/kg MS and $6.50/kg MS (26.6c/litre to 27.6c/litre). The farmer-owned dairy co-op blamed rising global milk supply for the latest cut in its farmgate milk price, despite stating that demand from key dairy buying regions remained strong.

Fonterra also said trade tensions in global markets was negatively affecting demand from countries that traditionally buy a lot of at products.

Geopolitical disruption

“Demand from China and Asia remains strong. However, we are seeing geopolitical disruption impacting demand from countries that traditionally buy a lot of fat products from us,” said Fonterra chair John Monaghan.

Closer to home, milk powder prices reported from European spot markets continue to firm in a positive signal for early 2019.

Spot prices for whole milk powder (WMP) are up 1% this week to €2,700/t, according to the Dutch Dairy Board.

Prices for skimmed milk powder (SMP) have also risen this week by more than 2% to €1,700/t and are now trading above intervention prices for the first time since August 2017.