News Milk

Better-performing Fonterra raises milk price

May 29, 2024 - Klaas van der Horst

Fonterra increases the milk price expectation for the current production season slightly with a stable price forecast for the milk price itself and a slightly higher dividend estimate. For the new milk price year 2024-2025, it expects to pay out a little more.

This is indicated by the dairy giant in a message about the third quarter of production year 2023/2024. For the current year, Fonterra sticks to a milk price of NZ $7.80 per kilogram of fat and protein, which corresponds to a milk price of roughly €33.60 per 100 kilograms. In addition, members can expect a dividend of 63 cents per share, which is 3 cents more than the penultimate forecast.

For the new production season 2024/2025 starting from July, Fonterra estimates a milk price of NZ $8.00 per kilogram of fat and protein (€34.43 per 100 kilograms). This is the so-called midpoint milk price. The milk price can fluctuate between roughly NZ $7.25 and 8.75, as indicated by Fonterra.

Foodservice and consumers
In the third quarter, especially the foodservice and consumer products segments performed well, although foodservice did not perform as well as last year. The sales to China have not yet recovered or grown, according to the company. The better results in consumer products are remarkable, as this is one of the segments that Fonterra would like to sell within a year to a year and a half.

The gross result of Fonterra for the third quarter amounted to €815 million, the net profit to €551 million. This is lower than a year earlier, but at that time the results were embellished by the sale of, among other things, Soprole and other business units.

Mixed reactions to sales plans
CEO Miles Hurrell stated at a meeting earlier this week that he has received a lot of feedback regarding his sales plans, both from members and investors. There is a lot of interest in the company's consumer business. Members seem to have a slightly more nuanced view of the plans.
Dairy farmers in Australia are not happy at all with the sales plans. In recent years, they have already been facing a steadily lower milk price and fear an even lower milk price if Fonterra leaves their country.

Klaas van der Horst

Klaas van der Horst is a senior market specialist in dairy at DCA Market Intelligence. He also closely monitors developments in politics and agricultural policy.
kaas Cheddar

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