Global Dairy Trade: Fonterra first out on opening price at $8.60/kg ms

Fonterra is the first out of the starting gates for the new season opening price. But farmers have slammed their opening offer.

Farm lobby leaders have slammed Fonterra’s opening bid for milk, claiming their $8.60 per kilogram milk solids offer is part of a financial strategy.

One week out from deadline day for processors to reveal their opening milk prices for next season, Fonterra Oceania managing director David Breckenridge confirmed the figure for 2025-26, lower than the mid $9 per kilo milk solids range that farm lobby leaders were calling for.

“Our opening price is higher than the current season, reflecting improved global market conditions, although dampened by a continued soft domestic outlook,” Mr Breckenridge said.

“Geopolitical tensions and potential trade disruptions, along with currency volatility continue to create uncertainty for the longer-term outlook.”

Fonterra Oceania managing director David Breckenridge

United Dairyfarmers of Victoria president Bernie Free said the $8.60 per kilo figure “was not a serious price” and part of Fonterra’s strategy at providing a low-ball figure.

“This is all part of a game by Fonterra and the other processors will join in,” he said.

“At a time when farmers are being hit with drought, the best you could describe $8.60 is a bloody joke.

“You’d have to say this is all part of a game where they offer $8.60, hope the other processors offer a low figure too, and they weigh down the price. It’s a disgrace.”

Dairy Farmers Victoria president Mark Billing said the $8.60 figure may be in the short-term interests of processors, but it would do medium and long-term damage to everyone along the dairy supply chain.

“It’s damaging short-term thinking. $8.60 does not meet the needs of farmers facing high fodder prices and shortages, rising power bills and the general hardship of drought.

“They need to do better and that goes for all processors. The mid $9s are needed at such a critical time for our industry.”

Last week, the headline figure in the latest Global Dairy Trade trading session posted a modest decrease of 0.9 per cent to sit at $US4589 ($A7113) per tonne.

The whole milk powder category hardly moved with a 1 per cent dip to $US4332 ($A6715) per tonne while skim milk powder softened by 0.7 per cent to $US2817 ($A4366) per tonne.

Mr Breckenridge said international demand had shown signs of growth, with constrained supply driving an uptick in global prices throughout the year.

“Australian dairy exports have strengthened on the previous year in value and volume,” the Fonterra chief said.

“These improvements have been supported by a return to balance between local and global dairy prices and a favourable yet volatile Australian dollar.

“Our domestic market, where we direct the majority of our milk, remains challenging. “Inflationary pressures have yet to fully ease, and segments of Australian consumers continue to chase value through lower-cost dairy products.”

Under the federal government’s mandatory dairy code of conduct, all processors have to publicly list their offers on their respective websites by 2pm on June 1.

Due to June 1 falling on a Sunday this year, the deadline day is rolled forward to June 2 by the Australian Competition and Consumer Commission.