Fonterra revises 2017/18 Farmgate Milk Price [News Oceania n°17/2018]

Period: August 6 – 17, 2018

Feed markets remain tight in Australia. Heavy rain in parts of Tasmania and South Australia, Western Australia and Victoria has led to waterlogged crops. In contrast, News South Wales has been declared a drought zone. Some observers had previously projected a 2% increase for the new season. Now analysts express concern with cost of feed and water factors making 2% tougher to reach.

In New Zealand, milk production in July 2018 increased, recording +5.7% compared to July 2017. In the first two months of the new season, June-July 2018, milk production increased by 8%.

In recent days, Fonterra has given two important announcements: the revision of 2017/18 forecast Farmgate Milk Price to $6.70 per kgMS from $6.75 per kgMS and the appointment of interim CEO Miles Hurrell.

Average prices of dairy commodities in Oceania follow different trends: SMP and Butter decreased, WMP and Cheddar Cheese increased.

Butter prices are lower than Western Europe. Butter producers are very optimistic about the upcoming season. Contracting for the first half is well along.

Cheddar Cheese market has further strengthened. Cheese manufacturers are feeling positive about the new season. A significant amount of first half Cheese production has been committed. Traders indicate that most sales are to regular customers.

SMP price is slightly down. SMP production is at a very low level. Most milk currently ongoing into processing is going into WMP, the main destination of milk (after fluid milk bottling), whose price is increasing.

Dairy product prices declined at the Global Dairy Trade auction yesterday. The index was down 3.6% to an average price of $US 3044, the lowest price this year.

– Assessments about market trend are expressed in US$;
– Dairy season: July, 1st – June, 30th (Australia), June, 1st – May, 31st (New Zealand);
– Source: USDA summarized by the CLAL Team