Following on from the huge lift in the GDT auction result this week, up 15% and the eight consecutive rise in results, the largest dairy processor in New Zealand, Fonterra, has lifted its milk price forecast. The midpoint in the forecast range is now $7.60/kg milk solids (31.5 c/l), up from a mid-point of $7.20 (30 c/l).
Fonterra farmers are coming to the end of the milk production season and closer to final payout - the opposite of Irish milk suppliers.
Fonterra CEO Miles Hurrell says the lift in the 2020/21 forecast Farmgate Milk Price range is a result of consistent strong demand for New Zealand dairy.
“We’ve seen Global Dairy Trade (GDT) prices continuing to increase since February, when we last updated on our forecast Farmgate Milk Price and then this week there was the 15% increase in GDT prices.
“It’s very much a China demand-led story, but there is also good demand for New Zealand dairy across South East Asia and the Middle East.
“China’s strong economic recovery, following the initial impact of COVID-19, is flowing through to strong demand for dairy, and we’ve seen this through sales during Chinese New Year.
“China’s local milk supply is being used in fresh dairy products and they are looking to us to provide longer-life dairy products – in particular, whole milk powder, which has a big influence on the forecast Farmgate Milk Price.
“Customers know we are continuing to get products to market, despite the challenges in the global supply chain, and they are looking to us for this reliability. We’re also seeing customers want to buy more of our products than usual, to help mitigate the risk of global supply chain delays.”
Euro cent per litre figures above are corrected for currency and milk solids to allow comparison with Irish prices.