New Zealand co-operative, Fonterra, has revised its 2018/19 forecast Farmgate Milk Price from $7.00 (€3.98) per kgMS to $6.75 (€3.84) per kgMS. The change was in response to stronger milk supply signals coming from some of the world’s key dairy producing regions, Fonterra said.

“Over the past quarter, we have seen increased milk supply out of markets including Europe, the US and Argentina," said John Monaghan, chair of Fonterra. "These regions have a big influence on the supply and demand balance and therefore global prices. For example, the 1% increase in US milk production represents just under 100m litres of extra milk."

He added that demand for whole milk powder and dairy fats are showing signs of slowing.

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The weakening of the NZD/USD exchange rate only partially offset the decline in global dairy prices, Fonterra CEO Miles Hurrell said.

“It’s still very early in the season and a lot can change over the coming months,” said Hurrell.

Meanwhile in Europe, demand for SMP recovered this week at the latest sale of stock from intervention.