Fonterra trims 2018 milk collection forecast on wet August, September

Monday 16th October 2017

Fonterra Cooperative Group trimmed its milk collection outlook for the 2018 season after a wet August and September sapped production, especially in the North Island.

The Auckland-based cooperative lowered the forecast to 1,540 million kilograms of milk solids for the year ending May 31, 2018 from a previous projection of 1,575 kgMS, it said in its latest Global Dairy Update. Fonterra collected 171 million kgMS in September, down 2 percent from the same month a year earlier, while the year-to-date collection slipped 1 percent to 294 million kgMS.

"Fonterra New Zealand milk collection continues to be impacted by unfavourable weather conditions, particularly in the North Island," the company said. "Weather conditions in August and September have impacted milk production across most of the country. The full season forecast is dependent on improved conditions through the rest of the season."

The 2018 season started well with the first two months of the year tracking 10 percent ahead of 2017 before heavy rain created a challenging environment for farmers as calving began.

Australian milk collection rose 23 percent in September to 15.1 million kgMS, with the season-to-date also up 23 percent at 34.2 million kgMS collect, as Fonterra attracted new farmer suppliers after the problems at Murray Goulburn.

"Continued growth in Fonterra’s Australian milk pool has been driven by both existing and new suppliers that have joined Fonterra this season," the company said. "As well, favourable seasonal conditions, strong pasture growth and reasonable feed input costs across all supply regions continue to support ongoing growth."

Units in the Fonterra Shareholders Fund, which gives investors exposure to Fonterra's earnings stream, rose 0.5 percent to $6.21, having gained 3 percent so far this year.

(BusinessDesk)

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