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Oct 10 (Reuters) - Fonterra Group Ltd said on Wednesday it lowered its 2018-2019 guidance for its Farmgate Milk price due to a glut in global milk supply.
The world’s largest dairy exporter lowered the price for farmgate milk - the price the company pays farmers - to a range of NZ$6.25 to NZ$6.50 per kgMS (kg of milk solids) from the prior NZ$6.75 per kgMS.
Fonterra Chief Executive Miles Hurrell said the change in the forecast farmgate price was due to a stronger global milk supply relative to current demand.
This is Fonterra’s third revision in nearly five months at a time when the global dairy prices have slipped four times in a row.
Hurrell said production from Europe, United States and Argentina was strong so far this year.
“Demand for whole milk powder, in particular, continues to grow in China, and it remains strong across South East Asia, but it simply isn’t matching current levels of supply,” Hurrell added.
At an auction earlier this month, prices for whole milk powder fell 1.2 percent, much further than futures market expectations of a roughly 0.4 percent drop. (Reporting by Nikhil Subba in Bengaluru. Editing by Jane Merriman)