Fonterra has announced an upward revision to its forecast Farmgate Milk Price for the 2023/24 season. The midpoint of the forecast has been raised by 30 cents to $7.80 per kgMS, compared to the previous forecast of $7.50 per kgMS.
Additionally, the forecast range for the season has been adjusted to $7.30-$8.30 per kgMS, up from $7.00 - $8.00 per kgMS.
CEO Miles Hurrell attributed this increase in the Farmgate Milk Price to the positive performance of five consecutive Global Dairy Trade events. He highlighted a surge in demand for Fonterra's reference commodity products, particularly from the Middle East and South East Asia, resulting in higher GDT prices. Whole milk powder prices have notably risen by 11.5 percent since the last update in December, contributing to an overall 10 percent increase in GDT prices.
Hurrell acknowledged the potential uncertainties of geopolitical instability and supply chain disruptions in key importing regions. However, he said he has confidence in Fonterra's ability to navigate these challenges due to its scale and market diversification, which provide flexibility.
"We are also well placed to continue to get the Co-op's product to customers through our partnership with Kotahi," said Hurrell.
Despite adjusting the Farmgate Milk Price forecast, Fonterra maintained its earnings guidance for FY24 at 50-65 cents per share.
