Pressure is on other processors to match Fonterra and Synlait on milk price forecasts

Competition  for  raw  milk  supplies  has  sharpened  as  Synlait Milk has joined  Fonterra  with a milk price forecast for the new dairy season   at  $9.50kg/MS.

Earlier  the  company had  announced  a  milk price  for  the  2022-23  season at  $9kg/MS, but    the  outlook has  got  even  better since  then, with  foreign  exchange  movements  further supporting a  strong  milk price.

The upgraded price is a record for the company.

Synlait CEO  Grant Watson says the forecasted lift in milk price reflects an improved outlook for 2022/23 dairy commodity prices, following the recent recovery in pricing, and the current strength of the US dollar.

“Over the next two days we’ll be meeting with our farmers at annual events in the Waikato and Canterbury and it will be great to share this news with them.”

There was no change to its forecast milk price for the 2021/2022 dairy season, which remains at $9.30 kg/MS.

With both Synlait  and  Fonterra racing to set their  forecasts so  high at the  beginning  of  a  new  season, the  pressure goes  on  other  processors  to  match them. Continue reading “Pressure is on other processors to match Fonterra and Synlait on milk price forecasts”

Farmers start new dairy season on an encouraging note as Fonterra signals another record milk price

New  Zealand’s  dairy  industry, which is  proving  again it is  the  backbone of  the  country’s  export industries, has  been  given  fresh encouragement with the big  co-op Fonterra signalling  a  record  milk price for  the  season  that  has  just  opened.

It  comes  as the  payout  for  the  just-finished  season  stands  as  the  highest  since  the  co-op  was  formed in 2001.

So although farmers have  made  decisions for  this  season on  the  number  of  cows  they  are  milking,  they  have the  incentive  to go  hard on production  levels,  despite the  pressure  from  higher  costs  and worries  over climate changes measures, including  projected charges on emissions.

Fonterra’s buoyant  forecast contrasts with  a recent  report  by agribusiness banking specialist Rabobank  which  said that despite global milk production looking set to decrease for the fourth consecutive quarter in Q2 2022, weakening global demand is expected to create a scenario that will see moderate price declines in dairy commodities during the second half of the year. Continue reading “Farmers start new dairy season on an encouraging note as Fonterra signals another record milk price”

Milk price forecasts are being lifted ahead of critical vote on Fonterra’s capital structure

As dairy farmers prepare for the critical decision  they have to make  on the capital shape of the big co-operative Fonterra,  they  will   be  buoyed  by  the  strong markets across the  globe  for  dairy products — so  strong  that economists are  revising   their forecasts  for  this  season’s  payout.

Fonterra  itself  has  already revised  upwards  its  original forecast range from $7.90 – $8.90kgMS, from  $7.25 – $8.75  kgMS.

The Advance Rate which Fonterra pays its farmer owners will be set off the mid-point of the range. This has increased from $8kgMS to $8.40kgMS.

ANZ  Bank  economists have  raised   their  forecast  to  $8.80  while others,  citing  the  futures  market, see  it  breaking  $9. Continue reading “Milk price forecasts are being lifted ahead of critical vote on Fonterra’s capital structure”

Why NZ should get behind Miles Hurrell as he aims to broaden Fonterra’s product range

As  New Zealand moves  towards  reconnecting with the world,  62%  of  the   business  leaders  surveyed  in the  NZ  Herald’s “Mood  of the  Boardroom”  say  they are not  satisfied with the government’s  plan  for  reopening the country.  International business is  being  lost due to border difficulties.

So  the  NZ economy  again looks likely to be propped  up by the primary  sector. On  that  front, the  news  is  positive.  International markets  are  exhibiting  strong  demand  for our products,  with the  result  that export  prices  are even more  buoyant  than  seemed  likely   just  three  months ago.

Lamb is  fetching   record  prices   and  dairy,  despite  some  earlier predictions that global production  would  push  down prices, has  moved  in  the  other  direction,  to  the  extent   that Westpac senior  agri-economist  Nathan  Penny   this  week  raised  his  forecast  for  Fonterra’s farmgate  milk price this  season  by  75c  to $8.50kg/MS.  That would surpass the co-operative’s previous record high of $8.40kg/MS paid in the 2013/14 season.

Fonterra’s own forecast is for a  payout  between  $7.25 and $8.75kg/MS,  with  a  mid-point of  $8. That’s ahead of its $7.54  last season. Continue reading “Why NZ should get behind Miles Hurrell as he aims to broaden Fonterra’s product range”

Dairy prices should bring some cheer as bankers get tougher on farmers and govt further burdens them

The sun  may be shining  again  on  NZ’s  dairy industry:  spirited  bidding  at  the latest    global  dairy trade  auction  backs  up Fonterra’s move  last  month to  lift the  projected  payout  range to $6.55-$7.55 kg/MS.

The  average GDT  price  rose 3.7% to $US3446 a  tonne,  with the  key products  WMP up  3.6%  to $US3254, and SMP  6.7% to $US2924.

WMP prices, after dipping mid-year, have remained above the important $US3000/tonne level since July.  ANZ  in a market commentary   noted the auction outperformed expectations. Futures prices have steadily lifted since the previous GDT event in October.

Milk powder was strongly sought after  and that will  underpin  prospects the  milk price will reach  the highest   level  since  2014. Continue reading “Dairy prices should bring some cheer as bankers get tougher on farmers and govt further burdens them”

Fonterra’s milk-price news is soured by chairman’s critique of the co-op’s earnings performance

At last a ray of sunlight into  the  country’s cowsheds:  giant  dairy co-op Fonterra has lifted its forecast farmgate  milk price  to $6.30-$6.60kg/MS, up from $6-$6.30, on the back of   strong  global  demand.

The good news extends to next season, with ANZ  economists  predicting – because dairy commodity prices are improving more quickly than expected – the  forecast for  2019-20   could go as  high  as  $7.30kg/MS.

And there is  something  else  Fonterra suppliers might get a  bit of  a glow from: the  recognition   by  Fonterra’s  top brass  that the  co-op  has not been  performing anywhere  near  where it should be.   They’ll  be looking for a   sharp improvement,  even  if  the  co-op has a long  way to go to  match  the   achievements of  smaller outfits   like  A2 Milk and Synlait. Continue reading “Fonterra’s milk-price news is soured by chairman’s critique of the co-op’s earnings performance”