Fonterra has once again cut its forecast for farmgate milk prices on the back of lower than expected global commodity prices.
The New Zealand dairy company reduced its forecast farmgate milk price for the 2014/15 season to NZ$4.40 (US$3.19) per kgMS, from a previously reduced NZ$4.50 kgMS.
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Chairman John Wilson said the revised forecast reflected the reality that global commodity prices had not increased as expected.
"World markets are over-supplied with dairy commodities after farmers globally increased production in response to the very good prices paid 12-18 months ago. This supply imbalance has heightened due to continuing good growing conditions in most dairy producing regions.
"This is a tough season and we will continue to keep our farmers informed as the season draws to a close given the current volatility."
The company also announced a forecast farmgate milk price of $5.25 per kgMS for the 2015/16 season.
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By GlobalData"We can expect prices to recover going forward, and to see a rebalancing of supply and demand over the season. However it is more difficult this early in the season to determine exactly when this recovery will lead to a sustained price improvement," said Wilson.
