Fonterra cuts farm-gate milk price forecast on global uncertainty

Global milk production likely to remain constrained amid rising costs
calendar icon 9 May 2022
clock icon 1 minute read

New Zealand's Fonterra on Monday cut the forecast range for the price it pays farmers for milk for the 2021/22 season as demand for dairy is hit by COVID-19 lockdowns in China, the Russia-Ukraine conflict, and an economic crisis in Sri Lanka, reported Reuters.

The dairy giant cut its forecast 2021/22 farm-gate milk price to between NZ$9.10 and NZ$9.50 per kilogram of milk solid (kgMS) from between NZ$9.30 and NZ$9.90 per kgMS earlier.

China's hard-line zero-COVID strategy has led to extended curbs in the country that have sapped demand and compounded global supply chain woes, while the crises in Ukraine and Sri Lanka have also been major demand disruptors.

"Looking out to the rest of the year, global milk production is expected to remain constrained as high feed, fertiliser and energy costs continue to impact production in the Northern Hemisphere," Chief Executive Miles Hurrell said in a statement.

Hurrell said, however, that the long-term outlook for dairy remained positive and the company expects global demand and supply to be more balanced over the rest of the year.

The Auckland-based company said it would monitor several risk factors, including the potential impact on demand from rising inflation and higher interest rates, as well as further disruptions from COVID and geopolitics.

Source: Reuters

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