Fonterra boosts forecast farmgate price range

Fonterra farmers have been given some early Christmas cheer with the news the co-op has lifted its 2019-2020 forecast farmgate milk price range from $6.25-$7.25 per kilogram of milksolids to $6.55-$7.55 kg/MS.

It will pay an advance rate which will be set off the midpoint, $7.05 per kgMS, of the revised range.

Bay of Plenty farmer Ian Jeffrey said the raised forecast would be welcomed by farmers.

‘‘Obviously the price is backed by the returns out there in the world, the marketing’s heading in the right direction and the company must be heading in the right direction. Considering they’re not paying a dividend – which makes total sense, the way it’s positioned right now financially – it’s a good move.’’

Fonterra chairman John Monaghan said the dairy giant had been achieving good prices for its milk so far this season. ‘‘Demand for whole milk powder (WMP) has been firm, and for the full season we’re expecting it to be above last year.’’

Fonterra’s skim milk powder had been selling at higher prices than European Union and United States dairy companies in global dairy trade auctions.

Fonterra has been achieving good prices for its milk.

Chairman John Monaghan

Chief executive Miles Hurrell warned while the signals looked positive, there were global trade tensions and political instability in some key sales regions. This was why there was a wide forecast price range. The strong demand for Fonterra milk was proof the co-op’s rationale of prioritising New Zealand milk was a correct one. ‘‘One of our four priorities is to support regional New Zealand. If you take the $7.05 mid-point of today’s revision to our forecast farmgate milk price, it’s another $450 million into regional New Zealand.’’