Fonterra lowers milk price twice over a short period

Fonterra has lowered the milk price for the current season for the second time in a short period. The dairy cooperative notices that dairy sales are becoming sluggish due to a significant increase in milk supply on the world market and the stronger New Zealand dollar. At the end of November, the forecast price for season 2025/26 was already reduced, and less than a month later it has been adjusted downwards again: by $0.50 to $9 per kilogramme of milk solids. In an explanation of the decision, CEO Miles Hurrel indicates that the increase in milk production in New Zealand, the United States, and the European Union is putting pressure on global dairy prices. This is also evident from the Global Dairy Trade, which again fell by 4.4% earlier this week. Nevertheless, Fonterra had a good first quarter with a profit of NZ $278 million. The New Zealand currency is also reportedly hindering Fonterra. The dairy cooperative exports about 95% of its production in its home country and is therefore one of the largest exporters. Since mid-November, the value of the currency has rapidly increased, although there was a declining trend prior to that. A year ago, the currency was worth approximately the same as it is now. Higher supply The milk supply in New Zealand remains strong this season. In October, production reached 3,130 tons of solids, an increase of 1.7% compared to the same period last year. Due to higher concentrations in the milk, production in kilograms of milk solids was 2.8% higher. Since 2021, the annual production peak has not been this high. Starting in November, the supply will seasonally decline again.