Just in time for Christmas, Fonterra announces record midpoint forecast.
Fonterra farmers have received an early Christmas present with the co-operative raising its forecast midpoint by 50 cents to a record $10/kg MS.
The new forecast range of $9.50-$10.50/kg MS reflected the ongoing strength of the global market.
Waikato Federated Farmers vice-president Andrew Reymer described it as “friggin’ amazing”.
“It’s great news and will be a nice Christmas bonus.”
It will take the pressure off a lot of farmers, and provincial towns will be the real winners because it’s their businesses that farmers use when they do their purchasing, he said.
He expects the lift in income will be used by farmers to pay off debt and prepare their businesses for the next time the forecast falls.
“This is the time to get ready for next year, pay off the overdraft and make sure you have some buffer for the next recession and be prudent – and that’s not putting a damper on the good news.”
The lift also saw Fonterra’s advance rate change to $8.50/kg MS for its December-paid January period. In September, the rate over that period was forecast as $7.60/kg MS.
Fonterra CEO Miles Hurrell said Fonterra is committed to providing farmers the highest sustainable milk price and he was pleased to announce another lift in the forecast for the season.
“We’re seeing a recovery of demand in greater China as domestic milk production rebalances and demand from southeast Asia continues to be strong.
“Looking at supply, milk production out of the US and Europe continues to be impacted by local factors, while production out of most regions of New Zealand has increased.
“We’re continuing to monitor factors that may influence global supply and demand dynamics, including any potential impact from heightened geopolitical uncertainty,” Hurrell said.
The forecast lift came after the first GDT auction for December saw whole milk powder prices lift 4.1% to sell for just under US$4000.
Fonterra’s forecast earnings for the 2025 financial year remain unchanged at 40-60 cents per share.
“Our forecast earnings range reflects an expectation our underlying operating profit will be stable as we offset the higher cost of milk in the second half of the financial year through improved sales volumes, product mix and pricing.
“It also reflects the change in Fonterra’s tax status, which is effective from this financial year and will reduce our reported earnings per share.”
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