Global economic conditions impact on Fonterra’s farm milk price

Since last September, prices on GlobalDairyTrade for Whole Milk Powder (WMP) have fallen 12 per cent, and Skim Milk Powder (SMP) prices are down 8 per cent.

Fonterra Co-operative Group Limited today reduced its forecast Farmgate Milk Price for the 2015/16 season from $4.60 per kgMS to $4.15 per kgMS.

When combined with the earnings per share range of 45-55 cents, this means a total available for payout of $4.60-$4.70 per kgMS and would currently equate to a forecast Cash Payout of $4.50-$4.55 per kgMS to our farmers after retentions.

Chairman John Wilson said global economic conditions continue to be challenging and are impacting demand for a range of commodities, including dairy.

“Key factors driving dairy demand are declining international oil prices which have weakened the spending power of countries reliant on oil revenues, economic uncertainty in developing economies and a slow recovery of dairy imports into China.

In addition, the Russian ban on European Union dairy imports continues to push more product on to the world market.

“There is still an imbalance between supply and demand which continues to put pressure on global milk prices.  Since last September, prices on GlobalDairyTrade for Whole Milk Powder (WMP) have fallen 12 per cent, and Skim Milk Powder (SMP) prices are down 8 per cent.

“Although New Zealand farmers have responded to lower global prices by reducing supply, that has yet to happen in other regions, including Europe, where milk volumes have continued to increase.

Chief Executive Theo Spierings said while global demand remained sluggish, Fonterra supported the general view that dairy prices will improve later this calendar year.

  • Fonterra
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