By David Winning
SYDNEY–Fonterra Cooperative Group Ltd. cut a key forecast for dairy prices, partly to reflect weaker-than-expected Chinese demand.
Fonterra said it now expects a farmgate milk price for the 2022/2023 season of between 8.00 New Zealand dollars (US$4.96) and NZ$8.60 per kilogram of milk solids. That is down from prior guidance of NZ$8.20-NZ$8.80.
“Skim milk powder prices have fallen 7% since February, and whole milk powder prices have not lifted to the levels assumed in the previous forecast,” said Miles Hurrell, Fonterra’s chief executive.
He said there were two main drivers for softer pricing outcomes, which comes as many farmers face increased costs.
“The first is demand from China for whole milk powder has not yet returned to expected levels,” Mr. Hurrell said. “The second is Northern Hemisphere milk production, and therefore skim milk powder stocks, are increasing as they head into their Spring flush.”
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