NZ: Fonterra revises down 2017/18 forecast farmgate milk price – Westpac

In NZ, Fonterra has revised down its farmgate milk price for the 2017/18 season from $6.75/KgMs to $6.40/KgMs, notes Shyamal Maharaj, Economist at Westpac.

Key Quotes

“Fonterra has revised down its farmgate milk price for the 2017/18 season from $6.75/KgMs to $6.40/KgMs. This announcement was expected given the spate of soft GlobalDairyTrade auction results, with whole milk powder prices falling around 16% to date from their peak in February this year.”

“In contrast, our forecast farmgate milk price for the 2017/18 season is currently at $6.20/KgMs. However, we recognise some upside risk to our milk price forecast considering the on-going impact of poor weather on production, namely the risk of drought, as outlined in our recent Fortnightly Agri Update.”

“Fonterra has also updated their full season milk collection forecast, citing poor weather conditions. The expected volume for the 2017/18 season is to be the same as last season’s milk collection of 1,525 million KgMs.”

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