The strong demand for New Zealand dairy has seen Fonterra Co-operative Group Limited narrow its 2020/21 forecast Farmgate Milk Price range, and report a solid start to the 2021 financial year.
Fonterra CEO Miles Hurrell says that the Co-op has narrowed and lifted the bottom end of the forecast Farmgate Milk Price range from NZ$6.30 – $7.30 per kgMS to NZ$6.70 – $7.30 per kgMS.
“This means the midpoint of the range, which famers are paid off, has increased to NZ$7.00 per kgMS.
“China is continuing to recover well from COVID-19 and this is reflected in recent Global Dairy Trade (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 as given use the confidence to narrow and lift the bottom end of the forecast Farmgate Milk Price range.
“Our forecasts would see the Co-op contribute around NZ$10.5 billion to the New Zealand economy this year.”
In terms of the company’s first quarter performance, Hurrell says that “sales volumes are in line with the same period last year, which was before we felt the impact of COVID-19”.