Fonterra revises its forecast farm gate milk price [News Oceania n°25/2018]

Period: November 26 – December 7, 2018

Milk production in Australia in October 2018, the seasonal pick’s month, was lower than October 2017, recording -5.7%. The total production of the first 4 months of the dairy season, July-October 2018, was 3.2 million liters (-4% compared to the same period of 2017).

There were production increases in Tasmania and South Australia, two states that together account for only 14% of Australian milk production. The worst hit states for milk production are Victoria and New South Wales, which together produce 78% of Australian milk.

Milk production in New Zealand, in June-October 2018, was +5.8% than the first 5 months of the previous dairy season.

Fonterra revised its 2018/19 forecast farm gate milk price range down from $6.25 6.50/kgMS to $6.00-6.30/kgMS. Fonterra Chairman John Monaghan says the revision in the forecast farmgate Milk Price range is due to a global milk supply remaining stronger than demand.

Dairy commodity prices are still declining, with the exception of WMP, whose production is heavy in New Zealand, but tempered in Australia, which must also keep adequate milk available for Butter, Cheese and SMP.

Butter production is active in New Zealand where Cream is more available to manufacturers. Australia, with a lower than expected milk production, continues to deal with the seasonal demand for Cream from supermarkets.

SMP production is active to strong. Demand is weaker near-term but firming moving past January. Stocks are increasing.

Also production of Cheddar is very active. Australian Cheddar manufacturers continue to deal with strong demand as well as good export demand.

- 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