Fonterra has slashed its forecast milk price for the 2023/24 season by $1 as demand slumps.

On Friday the co-operative announced a revised farmgate milk price range of $6.25 to $7.25 per kilogram of milk solids, with a mid-point of $7 per kgMS.

In May Fonterra said it expected to pay farmers between $7.25 and $8.75 per kgMS, with a mid-point of $8 per kgMS.

Fonterra chief executive Miles Hurrell said the new forecast reflected reduced chinese demand for whole milk powder.

“When we announced our opening 2023/24 season forecast farmgate milk price in May, we noted it reflected an expectation that China’s import demand for whole milk powder would lift over the medium-term,” he said.

“Since then, overall Global Dairy Trade (GDT) whole milk powder prices have fallen by 12%, and China’s share of whole milk powder volumes on GDT events has tracked below average levels.”

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Whole milk powder prices on the GDT auction platform have slid 4.5% this year and are 17% below the same time last year, with experts tipping further falls.

China currently had a surplus of fresh milk, meaning more whole milk powder was being produced locally and the country’s need for imported powder had fallen.

However, the medium to long term outlook for New Zealand dairy looked positive, with milk production from key exporting regions flat compared to last year, Hurrell said.

Source : Stuff NZ Aug 4th 2023