Fresh Agenda and the year ahead for milk

Fresh Agenda have just produced their latest half year report about the outlook for dairy.  The report is dominated by the supply and demand outlook for dairy commodities over the next two years, considering on a country by country basis the drivers of production and use.  

Milk price drop hurts

Fonterra's announcement of another milk price drop wasn't a complete surprise yesterday but it does make life uncomfortable for all the farm businesses under our management, and for those of us who own them. 

The reduction is going to create further pressure on farm cash flows in particular during the first six months of the new season. Fortunately the moderate debt structure of most MyFarm syndicates means they can withstand this volatility.

A week of good signals

Fonterra’s milk price forecast ($4.70/kgMS) for this season is looking more realistic and looking out to 2015/16 a milk price around $6.40/kgMS is achievable. Here’s why:

Taking the long term view

This week Fonterra and Open Country have announced further reductions in their forecast milk prices for this current season to $4.65/kgms (OCD) and $4.70/kgms (Fonterra). Synlait has also indicated its price to suppliers this season will "start with a 4".

These are unpleasantly low milk prices and unfortunately many dairy farm businesses will struggle to generate profits at this price level.

Agri-fax forecasts out

In our business we are hungry for information.  When I started my career, way too long ago (late 1980's), market updates were few and far between.  I remember two Dairy Board meetings per year which all and sundry attended because that was the only time to get an understanding of where the payout was heading - and they always put on a fantastic lunch.

Fonterra announces milk price for next season - $7.00/kg ms


2014/15 season opening forecast Farmgate Milk Price

Fonterra Co-operative Group Limited today announced an opening forecast Farmgate Milk Price of $7.00 per kgMS for the 2014/15 season - matching the opening forecast provided 12 months ago at the start of the 2013/14 season.

Dairy prices holding well

The export milk price has retained its buoyancy at the first global dairy auction for 2014.

The average winning price slipped 0.8% from the sale 3 weeks ago. This slight easing followed two consecutive gains in the price at the past two auctions.

Payout likely to survive fallout - Farmers Weekly

Fonterra’s handsome $7.50/kg milksolids payout forecast this season has not been threatened by any market reaction to its whistle-blowing on its food safety.

Its products sold readily and with premium prices in the large GlobalDairyTrade (GDT) auction today.

Dairy farmers can have confidence international commodity prices are high and are expected to remain strong.

So strong that if Fonterra was able to sell all of this season’s 2.5 million tonne production at today’s prices the payout result would be more like $8.50.


31 July 2013

Fonterra Co-operative Group Limited today lifted its Forecast Farmgate Milk Price for the FY14 season by 50 cents to $7.50 per kgMS and announced an estimated dividend of 32 cents per share - amounting to a Forecast Cash Payout of $7.82.

Chairman John Wilson said the higher Forecast Farmgate Milk Price for the new season reflected continuing strong international prices for dairy.

NZX Agrifax increases milk price prediction

In its June Dairy Report, NZX Agrifax has predicted its forecast milk price for the 2013/14 season to $7.15/kilogram milksolids (kgMS).

Reasons for a more optimistic view include: