(Reuters) - New Zealand's Fonterra on Thursday raised the forecast range for the price it pays farmers for milk in the 2021/22 season, citing an increase in global dairy rates due to strong demand and tight supply.
The dairy giant said high feed costs in the United States and the European Union had impacted milk production and these conditions were expected to continue in the coming months.
"Global demand for dairy remains firm, while global milk supply growth continues to track below average levels. These demand and supply dynamics are supporting the increase in prices," Chief Executive Miles Hurrell said in a statement.
Fonterra lifted its forecast for 2021/22 farmgate milk price to between NZ$9.30 and NZ$$9.90 per kilogram of milk solid (kgMS) from NZ$8.90 to NZ$9.50 per kgMS. It increased the midpoint of the range by 40 NZ cents to NZ$9.60 per kgMS.
The company also slashed its projection for New Zealand milk collection in the period by 3.8% to 1.48 billion kgMS as challenging weather conditions have continued to impact grass growing conditions in the country.
(This story corrects typographical error in paragraph 1)