Fonterra updated the prediction on the forecast farmgate milk price for Fonterra suppliers on Thursday night and it strengthened the midpoint to $7/kg milk solids (28c/l currency and solids corrected).
This price strengthening comes on the back of another strong Global Dairy Trade (GDT) auction result earlier this week and will put more confidence back into market sentiment, as Irish board members meet to set November milk price.
Strong Chinese demand
In a statement to suppliers, Fonterra CEO Miles Hurrell said China is continuing to recover well from COVID-19 and this is reflected in recent GDT auctions, with strong demand from Chinese buyers, especially for whole milk powder, which is a key driver of the milk price.
"The impact of COVID-19 continues to play out globally and we continue to have a watchful eye on the increasing northern hemisphere milk production and New Zealand dollar.
"However, we have contracted a good proportion of our sales book for this time of the season, which has given us the confidence to narrow and lift the bottom end of the forecast farmgate milk price range.
Remember, New Zealand farmers are past peak milk at this stage and milk supply flows are good with no impending drought yet anyway.
This week in Farm Tech Talk, we talk to Olin Greenan, a Monaghan man living and farming in the North Island (online Friday at 8pm).