Fonterra chair John Monaghan says the co-op has continued to earn good prices for its milk and as a result has increased the mid-point of its forecast farmgate milk price range by 25c to $7.30/kg MS (31.5c/litre at current currency conversion and corrected for Irish milk solids).

Monaghan said: “The higher price reflects a global dairy market that is tipped slightly in favour of demand. Our New Zealand milk production is forecast to be up 0.5% on last year.

"Annual milk production in the other key global supply regions of the US and EU are both growing at less than 1%. On the demand side, Global Dairy Trade prices have increased by about 6% since our previous forecast.

"Whole milk powder (WMP) prices, a key driver of our milk price, have hit their highest level since December 2016.

"At this stage of the year, we have contracted a good proportion of our sales book and that gives us the confidence to increase the mid-point of our forecast farmgate milk price range by 25c. Farmers will welcome what would be the fourth-highest milk price in our history. It represents a $11.2bn cash injection into our communities.”

The forecast farmgate milk price range is now $7.00 to $7.60/kg MS(30c to 33c/litre).

Dairy giant Fonterra has also cut 200 jobs from its global operations as it continues to tighten its belt. The job losses were revealed following the co-op's first-quarter update, during which it lifted its farmgate milk price forecast for 2020 to $7.30/kg MS, an increase of 25c.

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