Fonterra more positive on milk price outlook

Dairy giant Fonterra has become more upbeat about milk prices. The co-operative now expects this season’s milk price to be 50 cents per kilo of milk solids higher than it forecast in December (around 25 euro cents). The new 'midpoint' price is set at NZ$ 9.50 per kilo milk solids. Assuming that New Zealand milk contains 9% milk solids and given the current exchange rate, this translates to a milk price of €53.47 per 100 kilos, compared to €50.65 per 100 kilos according to the December forecast. The range within which the expected price may fluctuate has also been narrowed. Fonterra revises expectation and provides more guidance on the milk price for 2025/26. As a reason for the increase, Fonterra cites the improved mood in the dairy commodities market, as evidenced by the latest GDT auctions. The new contracts that Fonterra already has in the books also provide reason for optimism, according to CEO Miles Hurrell. Simultaneously with the new milk price expectation, Hurrell also announced that members can expect an additional dividend of 14 to 18 cents (7 to 9 euro cents) per share from the sale of the Mainland Group to Lactalis. This is in addition to the merger bonus of NZ $2 that had previously been promised. However, the extra money will only be released once the transfer of activities to Lactalis is finalized. This may take a few more weeks. The members have agreed to the final sale. For the normal dividend for the current season, Fonterra maintains a range of 45 to 65 cents per share (22 to 33 euro cents).