Fonterra has lifted its forecast farmgate milk price range to NZ$6.70kgMS – NZ$7.30kgMS due to strong demand from Chinese buyers, reflected in recent GDT auctions. The Q1 business update revealed that Group normalised EBIT had lifted to NZ$250m, up from NZ$72m last year. Fonterra CEO Miles Hurrell is pleased with the company’s performance as demand in China continues to recover, enabling further expansion into another 13 cities across China, and improvements in demand in Fonterra’s Southeast Asia consumer business. Hurrell said Fonterra is confident in its performance and is on track to deliver on its earnings guidance. He flagged remaining COVID-19 challenges, including how the global recession and new waves of infections will impact consumer demand but said the company maintains its current forecast earning range.
Meanwhile, the latest Global Dairy Update shows Fonterra’s output fell 1% YOY in October to 213.1m kgMS, taking season-to-date production 0.5% ahead of the season prior. Collections in the North Island were down 0.1% YOY but remain 1.2% ahead of the season prior. Poor soil moisture levels in the northeast of the North Island and Taranaki impacted collections from late October to early November. In the South Island, milk output fell 2.4% in October, putting season output 0.7% behind the comparative. Colder conditions impacted collections in Southland and Otago. Fonterra’s forecast milk collection for the 2021 season at 1,525m kgMS, is up 0.6% on the 2019/20 season.