Fonterra (NZX:FCG) raises 2021-22 estimated Farmgate Milk Price range

Highlights

  • Fonterra has risen its farmgate milk prices to NZ$8.90 per kgMS.
  • The move was undertaken to adjust the continued demand for NZ dairy in relation to its supply.

Fonterra Co-operative Group Limited (NZX:FCG), the globally acclaimed dairy group, has raised its Farmgate Milk Price.

Related Read: New Zealand’s Dairy Sector fuels the Country's Economic growth

Based in Auckland, the Group is the largest dairy exporter across the globe, with offices in more than 40 countries.

NZX dairy stocks- FCG

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FCG witnesses more demand and lesser supply of NZ dairy products

FCG has increased its farmgate milk prices for 2021-22 from NZ$7.90 - NZ$8.90 per kgMS as well as narrowed the forecasts of the same by NZ$7.25 - NZ$8.75 per kgMS.

Miles Hurrell, Fonterra’s CEO states the move has been taken owing to the continued demand for New Zealand dairy in comparison to its supply.

Now the mid-point range at which the farmers are being paid off has risen from NZ$8.00 per kgMS to NZ$8.40 per kgMS, which is the highest farmgate milk prices being paid by the Group.

As a result, the Group would witness nearly NZ$13 billion flow via milk price payments this season into NZ.

Do Read: Fonterra (NZX:FCG): Is it an NZ company? Why is it a Co-operative?

The global demand for milk has remained stable, while the milk supply is anticipated to be at below-average levels due to the lower US production, mainly on account of higher feed costs.

Hence, with the current demand and supply dynamics, Fonterra maintains its 2021/22 earnings guidance to be between 25-40 cents per share.

However, the demand could be affected by several factors, like impacts of COVID-19 on global markets, increased inflationary pressure, change in exchange rates, NZ weather conditions, etc.

At the time of writing, Fonterra Co-operative Group was down by 1.94% at NZ$3.040, on 26 October.

Bottom Line

Fonterra Co-operative Group continues to focus on its milk, being a leader in sustainability, as well as in dairy innovation and science.

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