Sharechat Logo

Fonterra tipped to lift milk price forecast on 'balanced' global dairy markets

Tuesday 20th March 2018

Text too small?

Nathan Penny, senior rural economist at ASB Bank, expects Fonterra Cooperative Group to lift its 2017/18 milk price forecast to $6.50/kg or above from the $6.40/kg set back in December when it reports its first-half results tomorrow.

Penny notes that the informal market median expectation is for $6.45/kg but “dairy prices have strengthened considerably since the December update” with whole milk powder prices up by around 16 percent since the December update, while overall prices have lifted around  8 percent.

Penny said gains in the New Zealand dollar against the US dollar since December may partially offset the lift but “we anticipate that earlier hedging by Fonterra at lower NZD levels may soften the impact from the stronger NZD,” he said.

Overall, global dairy markets are largely balanced and “all up, prices are well-supported at this level and are thus likely to track sideways over much of 2018,” he said. 

Tonight’s GlobalDairyTrade auction is expected to show that global dairy prices are largely unchanged, according to the OM Financial Limited, although the NZX Derivatives Market is pointing at a decline in whole milk powder and butter prices.   

(BusinessDesk)

  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

Updated: NZ central bank cuts rates, signals more to come
Ardern, Macron to chair meeting to stop social media's use in terrorism
NZ commodity prices lift in March, led by dairy
Barfoot sees regained momentum in Auckland sales amid flat prices
House prices rose in February but sales volumes fell 9.5%
NZ commodity prices continue to lift in February
Rising house prices put pressure on affordability through tail-end of 2018
Standard & Poor's lifts NZ's outlook to positive
Fuel imports drive NZ's annual trade deficit to 11-year high
RBNZ plucks bank capital numbers out of the air: Reddell

IRG See IRG research reports