FONTERRA has lifted its milk price forecast by 50 cents, increasing the midpoint to $8.50/kg milk solids for the 2024-2025 season.
The dairy co-operative has also lifted its advance rate schedule and advised that its 2024 earnings are forecast to be at the top end of the announced range of 60-70 cents per share.
Chief executive Miles Hurrell said the announcements reflect the recent lift in GDT prices as well as the strength of the co-op’s balance sheet.
Since announcing the opening forecast for the 2024-2024 season in May, GDT prices have improved, he said.
“We’ve reflected this in our revised forecast range, with our midpoint lifting 50 cents to $8.50/kg MS.
“It’s still early in the season, with a relatively small proportion of our sales book contracted, so we are maintaining a wide forecast range.
“Our new forecast range is $7.75-$9.25/kg MS, up from $7.25-$8.75/kg MS.”
The uplift in the advance rate payment schedule will see farmers paid more for their milk earlier in the season.
That rate lifts from $6-$7.25/kg MS from December paid January.
“Our balance sheet strength has allowed us to make several enhancements to the advance
rate schedule over the last two seasons,” he said.
Fonterra’s earnings for the 2024 financial year are forecast to be at the top end of the announced range of 60-70 cents per share.
“As we look to close out the books for the year, it’s become clear that we have maintained strong performance across FY24.
“We’re indicating we expect our earnings to be at the top end of our forecast range and this puts us on track for a strong full-year dividend,” Hurrell said.
Waikato Federated Farmers dairy chair Matthew Zonderop called the lift in forecast a game-changer for farmers at a period of the season when it is needed most.
“With the way interest rates have been and the price lifts across the board, it’s certainly going to make a difference, certainly at this time of year.
“Most guys have got large overdrafts and it will help bring down those quickly and cover basic expenses now at the moment when we need it the most.”
Fonterra will confirm its final earnings and full-year dividend when it reports its financial results in September.
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