Fonterra upgrades mid-point milk price forecast to $10/kg

Fonterra has upgraded its milk price forecast. Photo / Supplied

Fonterra has upgraded the mid-point of its 2024/25 farmgate milk price forecast by 50c to $10 per kg of milk solids, reflecting strength in the global market.

The forecast, a record high if it comes to pass, is in a range of $9.50-$10.50 per kgMS.

Fonterra chief executive Miles Hurrell said the co-op was seeing a recovery of demand in China as domestic milk production rebalanced and demand from Southeast Asia stayed strong.

“Looking at supply, milk production out of the United States and Europe continues to be impacted by local factors, while production out of most regions of New Zealand has increased,” he said.

“We’re continuing to monitor factors that may influence global supply and demand dynamics, including any potential impact from heightened geopolitical uncertainty.”

Fonterra’s forecast earnings for 2025 were unchanged at 40-60 cents per share.

“Our forecast earnings range reflects an expectation our underlying operating profit will be stable as we offset the higher cost of milk in the second half of the financial year through improved sales volumes, product mix, and pricing.

“It also reflects the change in Fonterra’s tax status, which is effective from this financial year and will reduce our reported earnings per share,” he said.

Today’s upgrade follows another strong Global Dairy Trade auction this week, which saw whole milk powder prices gain 4.1% to US$3984/tonne.

Futures market pricing had been pointing to a $10/kg milk price.

Jamie Gray is an Auckland-based journalist, covering the financial markets and the primary sector. He joined the Herald in 2011.