Fonterra tipped to lift milk price forecast on 'balanced' global dairy markets
By Rebecca Howard
March 20 (BusinessDesk) - Nathan Penny, senior rural economist at ASB Bank, expects Fonterra Cooperative Group to lift
its 2017/18 milk price forecast to $6.50/kg or above from the $6.40/kg set back in December when it reports its
first-half results tomorrow.
Penny notes that the informal market median expectation is for $6.45/kg but “dairy prices have strengthened considerably
since the December update” with whole milk powder prices up by around 16 percent since the December update, while
overall prices have lifted around 8 percent.
Penny said gains in the New Zealand dollar against the US dollar since December may partially offset the lift but “we
anticipate that earlier hedging by Fonterra at lower NZD levels may soften the impact from the stronger NZD,” he said.
Overall, global dairy markets are largely balanced and “all up, prices are well-supported at this level and are thus
likely to track sideways over much of 2018,” he said.
Tonight’s GlobalDairyTrade auction is expected to show that global dairy prices are largely unchanged, according to the
OM Financial Limited, although the NZX Derivatives Market is pointing at a decline in whole milk powder and butter
prices.
(BusinessDesk)