(Adds comments on forecast farmgate price cut, global supply and demand)
Aug 31 (Reuters) - New Zealand’s Fonterra Co-operative Group Ltd cut its forecast farmgate milk price for 2018-19 on Friday by 3.6 percent due to increased global supply.
The world’s top dairy exporter trimmed the forecast farmgate price to NZ$6.75 per kilogram of milk solids (kgMS) from NZ$7 per kgMS set earlier.
It cited the effects on global prices stemming from higher milk supply in markets such as Europe, the United States and Argentina as the reason for its move to cut the forecast.
“These regions have a big influence on the supply and demand balance and therefore global prices. For example, the one per cent increase in U.S. milk production represents just under 100 million litres of extra milk,” Chairman John Monaghan said in a statement.
Monaghan also cautioned of demand for whole milk powder and dairy fats showing signs of slowing in certain regions of Asia, Africa and the Middle East.
The weakening of the New Zealand dollar against the U.S. dollar had only partially offset the decline in global dairy prices, Fonterra Chief Executive Miles Hurrell said.
Friday’s announcement comes about three weeks after Fonterra cut its fiscal 2018 earnings guidance and lowered its forecast milk payout, looking to bolster its balance sheet amid tighter-than-expected margins. (Reporting by Aaron Saldanha in Bengaluru; Editing by Gareth Jones and Lisa Shumaker)