Fonterra Co-operative Group has raised its forecast milk price again, with the midpoint now reaching $10 per kilogram of milk solids (kgMS). This marks the co-op’s fourth adjustment of the season, following notable rises in dairy prices worldwide over the past few months.
Just three weeks ago, Fonterra raised its forecast, which began with a cautious outlook. Chief Executive Miles Hurrell expressed the co-op’s dedication to offering farmers the highest sustainable milk price and was pleased to announce the increase.
Demand in China is recovering as domestic milk production stabilises, while strong demand from Southeast Asia persists. In contrast, milk production in the U.S. and Europe is still being impacted by local conditions, whereas most regions in New Zealand have seen an increase in production.
Hurrell emphasised Fonterra’s continuous monitoring of the factors that may affect global supply and demand, which include “any potential impact from heightened geopolitical uncertainty.”
Fonterra has also released its first-quarter results, maintaining its earnings forecast at 40 to 60 cents per share.
Hurrell stated that the projected earnings range indicates an expectation of stable underlying operating profit. This stability is expected to be achieved by offsetting the increased cost of milk in the second half of the financial year through enhanced sales volumes, a better product mix, and effective pricing strategies.
“It also reflects the change in Fonterra’s tax status, which is effective from this financial year and will reduce our reported earnings per share.”
In November, Fonterra officially confirmed its intention to divest its consumer business. This sale includes well-known brands such as Anchor, Mainland, Kāpiti, Anlene, Anmum, Fernleaf, Western Star, Perfect Italiano, and others.
In addition to the well-known brands mentioned, the sale will also include integrated operations, including Fonterra Sri Lanka, Fonterra Oceania, and 17 manufacturing facilities worldwide, with three of those located in New Zealand.