Fonterra (ASX:FSF) reduces milk price forecast in light of soft demand

• Dairy producer Fonterra (FSF) reduces its forecast farmgate milk price range to between NZ$8.20 and NZ$8.80 (A$7.50 to A$8.05) per kilogram of milk solids for the 2022/2023 season
• The company also downgrades its forecast milk collections for the season to 1465 million kilograms of milk solids from 1480 kilograms
• The company cites soft demand at a time of “balanced supply” as the main reason for the revised forecast
• Fonterra is now examining its position for next season and will provide an opening forecast in May
• Shares in Fonterra last traded at $2.83 on Thursday, February 23

New Zealand dairy producer Fonterra (FSF) reduces its forecast farmgate milk price range to between NZ$8.20 and NZ$8.80 (A$7.50 to A$8.05) per kilogram of milk solids (kgMS) for the 2022/2023 season.

The company has also downgraded its forecast milk collections for the season to 1465 million kgMS from its previous forecast of 1480 kgMS.

Fonterra CEO Miles Hurrell said the revised forecast for the company’s milk price range and collections was due to a decrease in demand during a time of “balanced supply”.

“Demand for whole milk powder, particularly from Greater China, has been soft, with prices down around 5 per cent since the beginning of December,” Mr Hurrell said.

He said Fonterra would continue to take cautious action given a soft economic growth outlook in many global markets.

“Looking at milk production, while Fonterra’s collections for the season are up on this time last year, cyclone Gabrielle and dry conditions in the South Island have impacted the co-op’s full season expectations.”

The company is currently examining its position for next season and will provide an opening forecast in May.

Shares in Fonterra last traded at $2.83 on Thursday, February 23.