“Over the past quarter, we have seen increased milk supply out of markets including Europe, the US and Argentina,” Fonterra chairman, John Monaghan, said in a statement.
“These regions have a big influence on the supply and demand balance and therefore global prices. For example, the one per cent increase in US milk production represents just under 100 million litres of extra milk. At the same time, demand for whole milk powder and dairy fats is showing signs of slowing in some parts of Asia, Africa and the Middle East.”
Fonterra CEO, Miles Hurrell, explained that the weaker NZD/USD exchange rate only partially affected the decline in global dairy prices.
“It’s still very early in the season and a lot can change over the coming months. A drop in the new season Milk Price forecast will be frustrating to our farmers, but it’s important we give them the facts so they can make informed decisions in their farming businesses,” said Hurrell.
The dairy cooperative said that total milk production rose by 11 per cent in June, supported by improved conditions and winter milking. Global dairy prices were undercut by increased production.