Global prices fell 10% over the past two months since Fonterra reaffirmed its $6.75/kg forecast at the time of its annual results presentation.
After the latest 3.4% GDT index fall market analysts have found some unanimity with forecasts of $6.25-$6.50, along with predictions Fonterra would have to downgrade sooner rather than later.
Should Fonterra’s own continuous price modelling disclose 30c/kg or more movement to its forecast it was obliged to publish that immediately and a revision required by the Dairy Industry Restructuring Act is due in mid-December anyway.
It also planned an investor day and the release of its first-quarter trading results at about the same time.
The AgriHQ farmgate forecast fell another 5c to $6.19/kg after the NZX Dairy Derivatives market reacted to the latest GDT numbers.
Analyst Amy Castleton said the milk price was supported by a moderately stronger short-term outlook for anhydrous milk fat and a slightly weaker New Zealand dollar.
The AMF index was unchanged and prices for shipment from February through April were up.
Butter prices fell 5.9% and had fallen nearly 15% since their high points earlier this year.
Whole milk powder prices fell 2.7% in the GDT event and were now down 16% from their 2017 highs.
However, the high milk fat product prices underpinned a $6-plus milk price, at which dairy farmers would remain profitable.
ASB senior rural economist Nathan Penny said higher NZ milk production in October and the lift in European and American dairy exports contributed to the run of weak GDT results.
That led to a revision of his milk price forecast from $6.75 to $6.50.
Rabobank dairy analyst Michael Harvey said the GDT result was not what NZ dairy farmers wanted.
The general sentiment in global dairy markets was bearish and the GDT index was at an eight-month low point.
Harvey also drew attention to the October NZ milk flow and that EU milk deliveries were up 4.3% in September, the strongest growth in 18 month.
Rabobank would review its NZ milk price forecast in December.
