Fonterra Cooperative Group Ltd., New Zealand’s dairy giant, announced on Monday, a reduction to its 2022/23 forecast farmgate milk price midpoint by 20 cents to $8.30/kgMS from $8.50, in part due to weaker-than-expected Chinese demand and and increased US and Eurozone milk production.

Key quotes

“Since our last update in February, prices for our products on Global Dairy Trade have either declined or remained flat.

“There are two main drivers behind this. The first is demand from China for whole milk powder has not yet returned to expected levels.”

“The second is Northern Hemisphere milk production, and therefore skim milk powder stocks, are increasing as they head into their Spring flush."

Market reaction

The above news could be partly attributed to steep losses in the NZD/USD pair alongside risk aversion. The pair was last seen trading at 0.6217, down 0.60% on the day.