The farmer-owned co-operative reduced and narrowed its 2022/23 season forecast Farmgate Milk Price range from $8.50 to $9.50 per kilogram of milk solids (kgMS), with a midpoint of $9, to $8.20 to $8.80, with a midpoint of $8.50.

At the same time, it updated its forecast milk collections for the 2022/23 season to 1465 million kgMS, down from its previous forecast of 1480 million kgMS.

Fonterra chief executive Miles Hurrell said the revised forecast Farmgate Milk Price range reflected softened demand at a time of balanced supply.

“Demand for whole milk powder, particularly from Greater China, has been soft with prices down around 5% since the beginning of December.”

While Fonterra was encouraged by recent increased buying behaviour from China, it was too soon to determine the extent of the impact this might have on the rest of the season, he said.

It also remained cautious given a soft economic growth outlook in many regions globally.

“Looking at milk production, while Fonterra’s collections for the season are up on this time last year, cyclone Gabrielle and dry conditions in the South Island have impacted the co-op’s full season expectations.”

Globally, milk supply from key exporting regions was balanced.

Production from Europe and America was up on last year, but this was partly offset by lower collections in New Zealand, Australia and Latin America.

“The medium to long-term outlook for dairy, in particular New Zealand dairy, looks positive. We are assessing our position for next season and will provide our opening forecast in May,” Hurrell said.