June 21, 2018

Fonterra Australia announces opening milk price for 2018/19 season and increases farmgate milk price for 2017/18 season

Fonterra Australia announces opening milk price for 2018/19 season and increases farmgate milk price for 2017/18 season

  • Opening average milk price of $5.85 per kilogram of milk solids (kgMS) for season 2018/19
  • Updated forecast closing average milk price range to $5.85 to $6.20kgMS for season 2018/19
  • Step-up to $5.68kgMS, plus $0.40kgMS, for a total cash payout and forecast average closing milk price of $6.08kgMS for season 2017/18

Fonterra Australia has today advised its suppliers an opening price of $5.85 per kilogram of milk solids (kgMS) and upgraded its forecast closing range to $5.85 to $6.20kgMS for season 2018/19.

Fonterra Australia Managing Director René Dedoncker said this price reflects what the company can earn in the market, as Fonterra continues to optimise its assets, strengthen its strategic partnerships, improve its product mix, and drive greater returns from domestic and global markets.

“Our opening and upgraded forecast closing range are based on a continued positive global supply and demand outlook, coupled with more favourable currency movements. Demand is expected to remain strong – especially from China for milk powders and Japan for cheese, as well as butter and AMF globally – and the global dairy market’s current strong prices are expected to continue throughout the new season.

“Since our last price review, we have achieved positive sales in key cheese export markets, GDT remains at supportive levels, and the short-term weakness in the Australian dollar has given us confidence to update our forecast closing range.

“This is a market-based and sustainable price, and is another step towards pricing simplicity – which is what the industry is calling for.

“In line with our commitment to give farmers earlier pricing signals to assist them in planning ahead, we again provided a forecast closing range in May, we have continued to offer Fixed Base Milk Price, and we provide regular market information in our Global Dairy Update Australia,” said Mr Dedoncker.

Fonterra also advised suppliers that it is increasing its farmgate milk price for the 2017/18 season to $5.68kgMS, plus $0.40kgMS, for a total cash payout and forecast average closing milk price of $6.08/kgMS. The increase will apply from 1 July 2017 and will be paid on 15 July 2018.

“Our business is in good shape as we continue to strengthen our long-term relationships with strategic customers, implement a number of capacity and efficiency improvements across our network, including our state-of-the-art Stanhope cheese plant, and we’ve launched Farm Source, which is changing the way we work with our farmers and provides benefits beyond the milk price.

“We are confident in the long-term fundamentals of Australian dairy and remain committed to continuing to pay our farmers a sustainable farmgate milk price that is reflective of the market,” Mr Dedoncker concluded.