New options will be offered at the FMP event on June 9 and 10.
Fonterra is to expand the Fixed Milk Price service to farmers wanting to reduce some of their income risk.
The three enhancements include an option to fix a price in two seasons, a minimum or floor price lock-in option and both a minimum and maximum price range for the current season.
The new options will be offered at the FMP event on June 9 and 10 and more details will be announced in May.
Fonterra milk supply director Lisa Payne said demand for the FMP service has been steadily building since its introduction in 2019.
Farmers had fixed prices over 120 million kg of milksolids in the 2024-25 season and in the first event for the 2025-26 season 300 farmers had locked in 15 million kg of the 20 million kg offering.
Changes were made before the 2025 season that included greater flexibility in over-subscribed events and a doubling of the total offerings for the season to 150 million kg, or 10% of Fonterra’s full milk supply.
“Expanding our price risk management services also brings benefits to the whole co-operative,” Payne said.
“When we can lock in set prices for a portion of our milk supply, we are able to offer price risk management solutions to key customers that value price certainty for the products they buy from us.
“These solutions are often a key reason customers choose Fonterra as a supplier over other companies, and the premiums earned flow through as improved earnings.”
Each supply season has 10 FMP monthly events, beginning with March, April and May before the June 1 start of the season.
Offer prices are based on the average SGZ-NZX milk price futures contracts values on three days following the first GDT event of the month.
When that offer price is published over the weekend, farmers have Monday and Tuesday to make their bids for milksolid volumes in the FMP.
Farmers can fix the price of up to half their seasonal production and can choose to participate when it suits them.
Fonterra’s signalled enhancement on a minimum or floor price option, ensuring that participants don’t miss out on milk price increases, will compete with the Figured/StoneX Put Option product that has just been launched.
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