NEW ZEALAND – New Zealand-based global dairy nutrition cooperative, Fonterra, has narrowed down its farmgate milk price range to NZ$8.10-$8.30 kgMS from NZ$8.00-$8.60 kgMS with a midpoint of 8.20 kgMS from a previously announced NZ$8.30 kgMS.
According to the CEO of the company, Miles Hurrell, the New Zealand cooperative has narrowed its forecast range for the 2022/23 season as lower global dairy trade prices persist.
“We’re well through the season now, with almost all our milk contracted, giving us more certainty on where we’ll end the season. Global Dairy Trade prices have not recovered to the levels required to hold the previous midpoint for this season,” he said.
Miles also revealed that the cooperative has unveiled a wide opening forecast farmgate milk prices range for the next season which is NZ$7.25 to $8.75 per kgMS, with a midpoint of $8.00 per kgMS.
“The opening forecast Farmgate Milk Price for next season reflects an expectation that China’s demand for whole milk powder will lift over the medium-term,” explained Hurrell.
He added that the co-op expects demand to gradually strengthen over the course of FY24 as China’s economy recovers post-COVID-19.
“However, the timing and extent of this remain uncertain, with China’s in-market whole milk powder stocks estimated to be above normal levels following increased domestic production,” he noted.
The CEO highlighted that Fonterra has designed new Advanced Rate Guidelines to get cash for farmers earlier in the season.
According to the company’s report, Fonterra had reported a normalized profit after tax of NZ$1,078m, up NZ$606m, excluding net gains from dividends.
The profit was reported from the strong performance in the company’s ingredients channel, with continued higher margins in our cheese and protein portfolio, particularly casein and caseinate.
A statement from Hurrel explained that the favorable price relative continued longer than expected, and improved performance is seen coming through in the company’s Foodservice and Consumer channels, in Global Markets.
“As a result, we have lifted our FY23 full-year forecast normalized earnings to 65-80 cents per share from 55-75 cents per share and remain on track for a strong full-year dividend,” he added.
Meanwhile, Fronterra’s profit after tax stood at NZ$1,326m for Q3 FY23, considering the NZ$260m gain from the sale of Soprole.
“With the sale of Soprole now complete, we are bringing forward payment of our proposed capital return of around 50 cents per share and unit from October 2023 to August 2023,” said Hurrell.
Fonterra also announced it has invested in Ruminant BioTech, a start-up that’s developing a slow-release methane-inhibiting bonus, through the co-op’s Centre for Climate Action JV.