Fonterra Co-operative Group Ltd <FCG.NZ> stood by its forecast milk payment to farmers for the 2019-2020 season, but urged them to exercise caution with on-farm decisions due to coronavirus-led uncertainty.
"It's clear that the COVID-19 outbreak will continue to have an impact on the health and wellbeing of people and economies across the globe for an extended period, likely deep into 2021," Fonterra Chairman John Monaghan said in an email to farmers.
The dairy giant said it will announce its opening forecast Farmgate Milk Price range, or the price it pays farmers to procure milk, for the coming 2020-21 season in late May.
"We will be considering the high levels of uncertainty that we are seeing across the world, stronger supply signals from key dairy regions, and the NZ/US exchange rate as we forecast what prices could be more than a year from now," Monaghan said.
Offices, schools and all non-essential services such as bars, restaurants, cafes and playgrounds have been closed for almost a month as part of New Zealand's "Level 4" lockdown. The government is due to make a decision on whether to extend, lift or ease the lockdown later in the day.
The world's largest dairy exporter said it has already contracted a high percentage of milk sales for the current season, which was helping the company weather the coronavirus impact.
Fonterra added that while China, its biggest market, is slowly returning to normal, there was still a lot of recovery needed, and high supplies of milk in Latin America, Europe and the UK are likely to disrupt global supply/demand balance.
(Reporting by Shriya Ramakrishnan in Bengaluru; Editing by Daniel Wallis)
