Despite milk deliveries remaining higher in 2023, hope remains for improved ex-farm prices going by the recent Fonterra forecast.

On Monday, New Zealand’s largest dairy company, the Fonterra Co-operative Group increased its farm-gate milk price forecast on the back of improved demand for milk and weaker supplies.

It increased its 2023/24 season forecast farmgate milk price range to NZ$6.50 – $8.00 (€3.68-€4.53) per kg of milk solids (MS). The co-op also announced a new midpoint of NZ$7.25/kgMS, which is up 50 cents from the previous forecast.

“Here in New Zealand we’re forecasting collections to be slightly below last season, while aggregate milk growth in key export countries is expected to be below average for the full year of 2024, said Fonterra chief executive, Miles Hurrell.

“The El Nino weather pattern may have further impacts on supply, and this could be driving recent buyer sentiment,” he said.

“On the demand side, we have seen increases in recent Global Dairy Trade (GDT) events. While this has been encouraging, it is not yet clear whether the stronger demand from China will be sustained.

“For other key regions, customers remain relatively cautious in terms of their forward purchases,” said Mr Hurrell adding that it is still ‘early days’ when it comes to the amount of its 2024 sales book that the co-op has contracted.

“We still face significant exposure to volatility in commodity prices.

“Exchange rate volatility is another factor to keep in mind.”

Back home, GB milk deliveries for the month of September are down on the initial forecast, with the latest figures showing a 14m litre (1.4%) decrease compared to the same month last year.

Total GB milk deliveries for the month totalled 962m litres, with average daily deliveries at 32.05m litres per day. Production for the milk season to date (Apr–Sep) amounts to 6271m litres – an increase of 0.3% (17.5m litres) versus the same period in the 2022/23 season.

AHDB’s Forage for Knowledge said good grass growth in September, supported milk yields. Grass growth was consistently above levels measured in September 2022 and the average for 2017–2021.