Only 18 applications made for latest offer as producers hold out for more.

Swings in the milk price futures market have delivered Fonterra fixed milk price contract offers with widely differing volume outcomes over the past five months.

Since Fonterra first made monthly offerings for the 2024 season in March, the net offer price has varied between $8.68 (March) and $7.55/kg milksolids (July).

Unsurprisingly, dairy farmers flocked to the first offer but shunned the most recent, when only 18 applications were made.

In March the full allocation of 15 million kg milksolids was taken up by 301 farmers.

In April the $7.74 net offer price attracted 41 applications and only 1.2 million kg were allocated.

In May and June the fixed milk price (FMP) offer prices rebounded to $8.39 and around 200 farmers took up each offering, with allocations around 7.5 million kg in both months.

The 18 applicants in July took only 380,000kg, an average of about 21,000kg each.

Fonterra makes 10 monthly offers covering one dairy season – three pre-season months of March, April and May, and seven consecutive in-season months between June and December.

Therefore, halfway through the 2024 season FMP cycle just 31.5 million kg has been contracted by farmers, compared with 65 million kg offered.

Clearly farmers have a more optimistic view of the farmgate milk price than the prevailing sentiment in the SGX-NZX futures market, which has the 2024 price about $7.80 and the 2025 price about $7.90.

Fonterra’s forecast range is $7.25 to $8.75 with a midpoint of $8, ahead of what may be a new forecast towards the end of August. The current forecast was made in May.

All that can be said with confidence right now from the FMP pathway is that Fonterra’s farmers are not prepared to lock in less than $8.