Milk har­vest has a pos­i­tive start

Bush Telegraph - - NEWS -

Fon­terra Co-op­er­a­tive Group Lim­ited has re­vised its 2018/19 fore­cast Far­m­gate Milk Price from $6.75 per kgMS to a range of $6.25-$6.50 per kgMS.

It has also in­creased its fore­cast New Zealand milk col­lec­tion vol­umes by 1.3 per cent to 1550 mil­lion kgMS.

Fon­terra Chief Ex­ec­u­tive Miles Hur­rell says the change in the fore­cast Far­m­gate Milk Price was due to a stronger global milk sup­ply rel­a­tive to de­mand at this time.

“I know how hard it is for farm­ers when the fore­cast Far­m­gate Milk Price drops, but it’s im­por­tant they have the most up to date pic­ture so they can make the best de­ci­sions for their farm­ing busi­nesses.

“We are still see­ing strong pro­duc­tion com­ing from Europe, US and Ar­gentina. While the hot weather in Europe has slowed down the re­gion’s pro­duc­tion growth, it is still track­ing ahead of last year. US milk pro­duc­tion is up slightly and Ar­gentina’s is up 6.8 per cent.

“Here in New Zealand, the sea­son has got off to a pos­i­tive start, mainly thanks to good weather and early calv­ing in the South Is­land. As a re­sult, we have in­creased our fore­cast milk col­lec­tions for the year to 1550 mil­lion kgMS — up from 1525 mil­lion kgMS.

Mr Hur­rell says that global de­mand is not match­ing cur­rent in­creases in sup­ply.

“At re­cent Global Dairy Trade events, prices for all prod­ucts that make up the milk price have fallen. De­mand for WMP, in par­tic­u­lar, con­tin­ues to grow in China, and it re­mains strong across South East Asia, but it sim­ply isn’t match­ing cur­rent lev­els of sup­ply.”

On the new move to pro­vide a range for the fore­cast Far­m­gate Milk Price, Mr Hur­rell says it was the Co-op’s in­ten­tion to pro­vide the best pos­si­ble sig­nals.

“We op­er­ate in a hugely volatile global mar­ket place, so it is very dif­fi­cult to pin­point an ex­act fore­cast Far­m­gate Milk Price this early in the sea­son. For ex­am­ple, weather con­di­tions can change sud­denly and this can have a sig­nif­i­cant im­pact on the global milk sup­ply.

“As a re­sult, we have cho­sen to give a range of $6.25-$6.50 per kgMS and be clear that the Ad­vance Rate is based on $6.25 per kgMS and the fi­nal price could be out­side this range as we are still early in the sea­son and up against con­sid­er­able volatil­ity. We there­fore rec­om­mend farm­ers bud­get with on­go­ing cau­tion.”

The tim­ing of last week’s up­date is driven by avail­able mar­ket in­for­ma­tion and is not a DIRA re­quire­ment. Fon­terra is re­quired to give a fore­cast for DIRA pur­poses by 15 De­cem­ber 2018.

Milk tankers are be­ing kept busy with a pos­i­tive start to the sea­son.

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