Friday, November 16, 2018
 Fonterra Forecasts a Continuing Rise in Dairy Prices  

Fonterra gave weight to ideas that New Zealand's milk production is falling sharply in the closing months of 2012-13, by warning of a fall-off in its own collections – as it forecast higher prices ahead.

The Auckland-based group, said that dry weather, particularly in North Island, in mid-December and January had "resulted in a slowdown in milk supply growth".

Theo Spierings, the Fonterra chief executive, said: "We had a strong start to the season and milk collection volumes were running 6% ahead of last season on a year-to-date basis.

"However, the dry conditions mean we are currently forecasting total milk collection volumes to finish approximately 1% ahead for the full season."

The comments represent some of the most firm evidence yet of a fall-off in New Zealand milk production – speculation which has helped lift dairy prices at Fonterra's GlobalDairyTrade auctions to a 19-month high.

On Monday, Commonwealth Bank of Australia noted that "New Zealand milk deliveries in the first half of 2013 are at risk because of dry conditions", with North Island receiving less than half normal January rainfall.

"The sharp rise in Fonterra auction prices over the past month, particularly for deferred deliveries, is indicative of expected tightness in future supplies."

Fonterra itself forecast that prices, up 5% in February at GlobalDairyTrade, had further still to rise.

"Global dairy prices are likely to move higher in the second half of the season [2012-13]," the co-operative said.


Posted on Thursday, February 28, 2013 (Archive on Thursday, March 07, 2013)
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