Fonterra cuts milk price forecast for 2023/2024 season

 Global Dairy Trade prices are averaging at their lowest level in nearly five years, according to a major dairy auction, as Chinese demand remains soft and volumes being auctioned have increased.

Fonterra now expects to pay NZ$6.00-NZ$7.50 per kilogram of milk solid (kgMS) for the 2023-2024 season, down from its earlier forecast of NZ$6.25-NZ$7.75 per kgMS.

Falling dairy prices have been a concern for the New Zealand economy as well, as the sector accounts for more than 7% of the nation’s gross domestic product and the country is already in a technical recession.

“Reduced demand from key importing regions for whole milk powder is weighing on prices,” CEO Miles Hurrell said in a statement.

“While there are indications that demand will start to return over the second half of fiscal 2024, we do expect the pace of demand growth to be subdued relative to initial expectations.”