New Zealand farmer-owned co-op Fonterra has increased the milk price it expects to pay farmers for the 2023/2024 season.

Fonterra Co-operative Group announced on Monday that it expects the farmgate milk price to range between 22.9c/l and 29.33c/l, excluding VAT, with a new midpoint of 26.58c/l, excluding VAT.

This is up 1.83c/l from its forecast in late August.

Fonterra CEO Miles Hurrell says the improved outlook reflects both supply and demand dynamics.


“Here in New Zealand, we’re forecasting collections to be slightly below last season, while aggregate milk growth in key export countries is expected to be below average for FY24 [full year 2024]," he said.

He added that the El Niño weather pattern may have further impacts on supply and this could be driving recent buyer sentiment.

“On the demand side, we have seen increases in recent Global Dairy Trade events. While this has been encouraging, it is not yet clear whether the stronger demand from China will be sustained.

"For other key regions, customers remain relatively cautious in terms of their forward purchases," Hurrell maintained.

Early days

However, he said that it's still early days in terms of the proportion of 2024's sales book that the the co-op has contracted and the co-op still faces "significant exposure" to volatility in commodity prices.

“We’ll continue to let our farmers and the market know as soon as we can when we think things have materially shifted,” concluded Hurrell.