Dairy co-op Fonterra today (23 August) raised its forecast on farmgate milk process on the back of stronger commodity prices.
The New Zealand group announced a NZ$0.50 cent increase in the mid-point of its forecast farmgate milk price for the 2024/25 season and advised its 2024 financial year earnings are forecast to be “at the top end” of the announced range of 60-70 cents per share.
CEO Miles Hurrell said the announcements reflect the recent lift in Global Dairy Trade prices as well as the strength of Fonterra’s balance sheet.
“Since announcing our opening FY25 season forecast farmgate milk price in May, GDT prices have improved. We’ve reflected this in our revised forecast range, with our midpoint lifting fifty cents to NZ$8.50 per kgMS.”
“It’s still early in the season, with a relatively small proportion of our sales book contracted, so we are maintaining a wide forecast range. Our new forecast range is $7.75-$9.25 per kgMS, up from $7.25-$8.75 per kgMS.”
Hurrell said Fonterra had also raised its “advance rate” payment schedule, which means farmers will be paid more for their milk earlier in the season.
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“The adjustments announced today will see farmers paid 10% more of the 2025 financial year forecast farmgate milk price from December paid January compared to other seasons, assisting farmers with on-farm cash flow,” he added.
Fonterra also said it is now forecasting the earnings from continuing operations from 2024 financial year are forecast to be at the top end of the announced range of NZ$0.60-0.70 a share.
“As we look to close out the books for the year, it’s become clear that we have maintained strong performance across FY24,” Hurrell added.
Fonterra will report its financial results next month.
In May, the co-op announced plans to exit its consumer-facing business to focus on ingredients in what group described as a “step-change in strategic direction”.
Hurrell said at the time the process was expected to take “at least” 12 to 18 months, should it proceed, amid “unsolicited interest in parts of these businesses”.
He then added: “We believe we can grow further value for the co-op by focusing on being a B2B dairy nutrition provider, working closely with customers through our high-performing ingredients and foodservice channels.
