Fonterra has recently raised its
farmgate milk price forecast range for the 20/21 season, lifting the midpoint of its forecast range to $7.00 per kgMS. This is a clear sign that risks to downside are reducing as the co-op calved 20c off the bottom of its forecast range, taking us to a $6.70 - $7.30 band.
This is not a huge surprise given last week it was noted that there was the potential upside to forecasts.
We’ve had a solid run at recent Global Dairy Trade auctions, with Chinese demand for whole milk powder holding strong. Recent results were significant. Fonterra already has contracted a large chunk of this season’s production compared with the same point in previous seasons, which is also a good sign. Dairy prices are proving incredibly resilient, and demand is very strong which is great to see given how challenging the year has been and the dire forecasts predicted earlier in the year due to COVID-19.