Global Dairy Update October 2017

1
GLOBAL DAIRY
UPDATE
OCTOBER 2017
KEY DATES
• Unfavourable weather conditions impacting
New Zealand production. Production
increasing in Australia and the EU in July.
• Global dairy exports increased other than
from the United States, where exports
declined for the first time since June 2016.
• Further strong import growth in China.
Middle East and Africa imports down in June.

• In September, Fonterra New Zealand milk
collection was 2% behind September
last season. Fonterra Australia collection
increased 23% on September last year.
• Fonterra’s forecast milk collection in
New Zealand for the 2017/18 season was
lowered to 1,540 million kgMS.
• Helping protect one of
the North Island’s best
kept secrets.
• Supporting 1,549
community groups
(and counting).
2 November 2017
Fonterra Co-operative Group
Annual Meeting
Late November 2017
FY18 Q1 Business Update
3 November 2017
Fonterra Shareholders’ Fund
Annual Meeting
1 December 2017
Compliance Date for Share
Standard 2017/18 Season
OUR CO-OP

2
OUR MARKETS
GLOBAL PRODUCTION
UNFAVOURABLE
WEATHER CONDITIONS
IMPACTING NEW  ZEALAND
PRODUCTION. PRODUCTION
INCREASING IN AUSTRALIA
AND THE EU IN JULY
Australia production in
July increased 3% compared
to the same month last year.
Production for the 12 months
to July was down 6%
compared to the same
period the previous year.
The impact of poor weather
conditions in spring 2016
and soft farmgate milk prices
earlier in the year continue
to be reflected in this
seasonal decline.
Fonterra collections in
Australia have been reported
for September, see page 5
for details.
Total New Zealand milk
production in August was
down 2% compared to the
same month last year.
The recent challenging
weather conditions have
impacted supply in August
and are also expected to
have an impact on peak
milk volumes and future
production for the season.
For the 12 months to August,
milk production was down
1% compared to the same
period the previous year.
Fonterra collections have
been reported for September,
see page 5 for details.
Production change for
the 12 months to

July 2017
Production change
for the 12 months to
August 2017
AUSTRALIANEW ZEALAND
16
%%
US production in August
increased 2% compared
to the same month last
year as farmers continue
to benefit from increased
milk production per cow,
reported to be the highest
for the month of August
since 2003.²
Milk production for the
12 months to August
increased by 2% compared
to the same period the
previous year.
USA
EU production in July was
up 2% compared to the
same month last year.¹
The increase in July was
driven by continued growth
in production out of Italy,
Ireland and Poland, up a
combined 10%. Germany
and France, the two largest
producers in Europe, were
down again in July.
Production for the 12 months
to July was down 1%
compared to the same
period the previous year.
Production change for
the 12 months to

July 2017
Production change

for the 12 months to
August 2017
EUROPEAN UNION
2
%
To view a chart that
illustrates year-on-year
changes in production –
1
%
2 http://usda.mannlib.cornell.edu/usda/
current/MilkProd/MilkProd-09-19-2017.pdf
1 includes estimate for Denmark ( July).

3
%
OUR MARKETS
GLOBAL EXPORTS
GLOBAL DAIRY EXPORTS
INCREASED OTHER THAN
FROM THE UNITED STATES,
WHERE EXPORTS DECLINED
FOR THE FIRST TIME SINCE
JUNE 2016
Total New Zealand dairy
exports in July increased 8%
or 23,000 MT compared to
the same month last year.
The largest increases were
seen in WMP and cheese
exports, up 11,000 MT and
6,000 MT respectively
compared to July last year.
Exports for the 12 months to
July were flat on the previous
comparable period.
Fluid and fresh dairy was
up 31% or 66,000 MT, with
WMP and cheese also up a
combined 31,000 MT. These
increases were offset by
an 85,000 MT combined
decline in AMF, SMP, butter
and casein.
EU dairy exports¹ in June
increased 11% or 49,000 MT
compared to the same
month last year.
Exports of SMP were up
96%, or 40,000 MT, as
manufacturers cleared
SMP inventories as the
intervention programme
draws to a close.
Exports for the 12 months
to June were up 4% or
192,000 MT on the previous
comparable period.
Cheese, infant formula,
lactose and SMP were
up a combined 11% or
213,000 MT. However, fluid
and fresh dairy, the largest
export category, continued
to decline, down 31,000  MT.
Export change for the 12
months to July 2017
NEW ZEALANDEUROPEAN UNION
14
US dairy exports decreased
1% in July compared to the
same month the previous
year. This was largely a result
of declining SMP exports
offset by slightly improved
exports of cheese.
Exports for the 12 months
to July were up 14% or
274,000 MT on the previous
comparable period.
The US experienced
significant growth across
all key export categories, in
particular SMP, whey powder
and cheese, up a combined
223,000 MT or 20%.
Export change for the 12
months to July 2017
USA
4
Australian dairy exports
increased 9% in July
compared to the same
month the previous year.
This increase was driven
by SMP, which was up
10,000 MT or 113%, partially
offset by declines in WMP,
down 3,000 MT compared
to the same month last year.
Exports for the 12 months
to July were down 4%, or
27,000 MT on the previous
comparable period.
This decline was again
driven by SMP, butter and
cheese, down a combined
29,000 MT, partially offset by
an increase in fluid and fresh
dairy, up 12,000 MT for the
period to July.
AUSTRALIA
%
Export change for the 12
months to July 2017
0
Export change for the 12
months to June 2017
4
To view a chart that
illustrates year-on-year
changes in exports –
%%
1 Includes estimate for Andorra, Greenland,
Montenegro and Uzbekistan ( June).

4
OUR MARKETS
GLOBAL IMPORTS
FURTHER STRONG IMPORT
GROWTH IN CHINA.
MIDDLE EAST AND AFRICA
IMPORTS  DOWN IN JUNE
Asia² (excluding China)
dairy import volumes was
flat in June compared to
the same month last year,
as increases in cheese and
SMP were offset by declines
in whey powder, butter and
infant formula.
Imports for the 12 months
to June were up 9%, or
378,000 MT, compared
to the same period the
previous year.
Growth for the year was seen
across all import categories
except WMP. The largest
increases were in SMP, fluid
and fresh dairy and cheese,
up a combined 224,000 MT
or 11%.
Latin America’s¹ dairy
import volumes decreased
1% in June compared
to the same month the
previous year.
Increased imports of SMP,
up 7,000 MT or 25%, were
offset by declines in WMP
and fluid and fresh dairy,
down a combined 9,000 MT
or 15% compared to the
same month last year.
Imports for the 12 months
to June were up 9% or
160,000 MT. Growth was
largely a result of increased
imports of cheese and
SMP, up a combined 13% or
124,000  MT.
ASIALATIN AMERICA
99
China dairy imports were
up 28% or 54,000 MT in
August compared to the
same month last year.
Except for whey powder,
imports of all key dairy
categories increased. The
largest growth was seen in
WMP and fluid and fresh
dairy, up 17,000 MT and
12,000 MT respectively.
Imports for the 12 months
to August were up 9%, or
207,000 MT, compared to
the same period last year.
Growth was seen across all
key import categories, in
particular infant formula,
WMP and whey, which
grew a combined 13% or
147,000  MT.
Import change for 12
months to August 2017
CHINA
9
Middle East and Africa³
dairy imports decreased
16% or 59,000 MT in June
compared to the same
month the previous year.
Decreases were seen across
most key import categories
except fluid and fresh dairy
and SMP which were up a
combined 9% or 13,000 MT.
Imports for the 12 months
to June decreased 2% or
89,000 MT compared to the
same period last year.
Although there were
increased imports of fluid
and fresh dairy and SMP,
two of the largest categories,
there were declines in
imports of most other
products this year.
MIDDLE EAST & AFRICA
1 Excludes Nicaragua and Venezuela.
Includes estimate for Belize ( June).
3 Includes estimate for Egypt and
Qatar ( June).
2 Includes estimate for Macao
(October-June).
%%
%
Import change for 12
months to June 2017
Import change for 12
months to June 2017
Import change for 12
months to June 2017
2
To view a chart that
illustrates year-on-year
changes in imports –
%

5
OUR MARKETS
FONTERRA MILK COLLECTION 2017/18 SEASON
NORTH ISLAND
Increase for the season from
1 July to 30 September
23
Decrease for the season
from 1 June to 30 September
AUSTRALIA
2
SOUTH ISLAND
%
To view a table that shows our
detailed milk collection in New
Zealand and Australia compared
to the previous season –
Decrease for the season
from 1 June to 30 September
Decrease for the season
from 1 June to 30 September
11
%%%
NEW ZEALAND MILK COLLECTION
VOLUME M LITRESDAY
JUNJULAUGSEPOCTNOVDECJANFEBMARAPRMAY









Fonterra’s milk collection
across Australia in
September reached 15 million
kgMS, 3 million kgMS higher
than September last season.
Continued growth in Fonterra’s
Australian milk pool has been
driven by both existing and
new suppliers that have joined
Fonterra this season. As well,
favourable seasonal conditions,
strong pasture growth and
reasonable feed input costs
across all supply regions continue
to support ongoing growth.
North Island milk collection
in September reached
108 million kgMS, 2% behind
September last season.
South Island milk collection
in September reached
63 million kgMS, 2% behind
September last season.
NEW ZEALAND
Fonterra’s milk collection
across New Zealand
reached 171 million kgMS in
September, 2% lower than
September last season.
Fonterra New Zealand milk
collection continues to be
impacted by unfavourable
weather conditions, particularly
in the North Island.
For the four months to 30
September, milk collection was
down 1% at 294 million kgMS.
An increase of 1%
on last season
1,540M
KGMS
Fonterra has lowered its
forecast milk collection
from 1,575 million kgMS to
1,540 million kgMS. This is a
1% increase on last season’s
collection of 1,526 million kgMS.
Weather conditions in August
and September have impacted
milk production across most
of the country.
The full season forecast is
dependent on improved
conditions through the rest of
the season.
We will continue to provide
updates as the season
progresses.
Forecast Fonterra
Milk Collection Across
New Zealand

6
OUR MARKETS
FONTERRA GLOBALDAIRYTRADE RESULTS
Fonterra GDT sales
by destination:
Dairy commodity prices
and New Zealand
dollar trend
Political uncertainty weighed
on the New Zealand dollar
for much of September,
which was evident in the
dovish trend throughout
the month.
Fonterra GDT results at
last trading event
3 October 2017:
The next trading event will be held on 17 October 2017. Visit www.globaldairytrade.info for more information.
To view more information,
including a snapshot of the
rolling year-to-date results –
5.0
Change in Fonterra’s
weighted average product
price from previous event
%
Fonterra’s weighted
average product price

(USD/MT)
Fonterra product quantity
sold on GDT
3,229
USD
36.6
NORTH ASIA (INCLUDING CHINA)
SOUTH EAST ASIA
MIDDLE EAST AND AFRICA
LATIN AMERICA
OTHER
GDT PRICE INDEXNZDUSD SPOT RATE
OCT  JUL 
DEC 
MAR MAY JUL OCT DEC  MAR 
MAY 
OCT 





,
,
.

.

.
.
.
PRICE INDEX
NZD  USD
000’ MT
AMF
3.8
1.3
SMP
1.9
%%%
%
CHEDDARRENNET CASEIN
1.4
%%
USD 6,504/MT
USD 6,123/MTUSD 4,109/MTUSD 1,895/MT
WMP
2.73.1
BUTTER
USD 3,037/MTUSD 5,837/MT
LATEST AUCTIONFINANCIAL
YEAR‑TO‑DATE
36,554
MT
165,948
MT

7
OUR CO-OP
Helping protect one of
the North Island’s best
kept secrets
The iconic Blue Spring in
Putaruru is home to around
a thousand more trees and
bushes thanks to a combined
planting effort by volunteers
from Fonterra, Dairy NZ,
Waikato Regional Council
and local iwi.
Sixty to seventy volunteers
braved the wet weather last
month in an effort to help
maintain the environment
of the spring which is part of
the Waihou River and known
to be one of New Zealand’s
most pristine waterways.
The land on which the shrubs
and trees were planted has
been retired from grazing
stock and the planting
was part of an ongoing
beautification process.
The day started with a
history lesson from local
iwi who told volunteers
about the area and how
the Waihou River was an
important journeying place
of King Te Wherowhero
Tawhiao, the second Maori
King of New Zealand.
The enthusiastic group
then split into two teams
with each team planting
around 500 native shrubs
and bushes as the rain
poured down.
Fonterra Area Manager
for the Waikato region,
Peter O’Shea says Fonterra
staff jumped at the chance to
help out.
“Despite the wet weather
the day was a real family
affair with both kids and
parents on hand to help out,
it was great to be part of
something that helps keep
this area looking its best.”
The blue spring water
is so pure it supplies
around seventy percent of
New Zealand’s bottled water.
Te Waihou walkway runs
alongside the Waihou River
and allows people to visit
the Blue Spring, which is
often described as one
of the North Island’s best
kept secrets.
Having just completed
letting the latest 172
successful applicants know
they will be receiving
between $500 and
$5,000, Fonterra’s Global
Sponsorship Manager
Kane Silcock says we will
start seeing another series
of initiatives being brought
to life across regional
New Zealand.
“We support an incredibly
wide range of community
projects, and as a result help
make so many people’s lives
and local communities that
little bit better,” says Kane.
Amongst the successful
applicants from this
round were:
• Hospice@Home who
plan to purchase two new
powerlift chairs to help
with their work providing
palliative care in people’s
own homes and support for
those in residential care
• Hauraki Plains College who
will use their money to
help fund their ‘Historical
Restoration Project’ which
aims to restore their
original Post Office and Jail
House to provide the rural
community with better
local historical knowledge
• Inglewood Playcentre who
are planning on improving
their facilities in an effort to
encourage more families to
come along and have fun
with their whanau
• Edendale Volunteer Fire
Brigade who will be buying
a thermal imaging camera
which will allow them to
check burning buildings
and help the brigade
respond to incidents
more efficiently.
“Already we’ve received
numerous emails thanking
our farmers, staff and local
community representatives
that make up our various
regional Fonterra Grass
Roots Committees for
the grants.”
Supporting 1,549
community groups
(and counting)
To see some of the results
from the funding and how
to apply visit the Fonterra
Grass Roots Fund Facebook
pages –

8

SUPPLEMENTARY INFORMATION
Global Dairy Market
The charts on the right
illustrate the year-on-year
changes in production,
exports and imports for a
range of countries that are
important players in global
dairy trade.
The absolute size of the
bars represents the change
in production, exports or
imports, relative to the same
period the previous year.
Averages are shown where
data is complete for the
regions presented.
PRODUCTION
AUSTRALIAAVERAGE
UNITED STATES
NEW ZEALANDEU
NOV JUN MAY APR FEB JAN DEC AUG OCT SEP JUL MAR 
LIQUID MILK M LITRES
,

















NOTE: Data for EU and Australia to July and New Zealand and US to August.
NOTE: Data for EU to June; New Zealand, US and Australia to July.
NOTE: Data for Asia, Middle East and Africa and Latin America to June, China to August.
SOURCE: Government milk production statistics/GTIS trade data/Fonterra analysis.
EXPORTS
AUSTRALIA
UNITED STATES
NEW ZEALANDEU
JUL JUN MAY MAR FEB JAN DEC NOV OCT SEP AUG APR 
MT s







AVERAGE
IMPORTS
MIDDLE EAST & AFRICALATIN AMERICA
ASIACHINA
NOV JUN MAY MAR FEB DEC JAN AUG OCT SEP APR JUL 
MT s






AVERAGE

9
Fonterra milk
production
The table on the right
shows Fonterra milk solids
collected in New Zealand
and Australia compared
to the previous season.

SUPPLEMENTARY INFORMATION
MILK COLLECTION
(MILLION KGMS)
SEPTEMBER
2017
SEPTEMBER

2016
MONTHLY
CHANGE
SEASON-
TO-DATE
2017/18
SEASON-
TO-DATE
2016/17
SEASON-
TO-DATE
CHANGE
Total Fonterra
New Zealand
171.1174.7(2.1%)293.5296.7(1.1%)
North Island107.8110.3(2.3%)202.6204.0(0.7%)
South Island63.464.4(1.6%)90.992.7(1.9%)
Fonterra Australia15. 112.323.0%34.227.723.3%
Fonterra GDT results
This table provides more
information on the latest
results, including a snapshot
of the year-to-date results.
Fonterra GDT Results
This chart shows Fonterra
GDT prices and volumes over
the past 12 months.
LAST TRADING EVENT
(3 OCTOBER 2017)
YEAR-TO-DATE

(FROM 1 AUGUST 2017)
Quantity Sold on GDT
(Winning MT)
36,554165,948
Change in Quantity Sold on GDT
over same period last year
11. 0%(3.6%)
Weighted Average Product Price
(USD/MT)
3,2293,349
Change in Weighted Average
Product Price over same period
last year
10.5%18.2%
Change in Weighted Average
Product Price from previous event
(5.0%)–
WEIGHTED AVERAGE PRICEQUANTITY SOLD
JAN
DEC
SEP
AUG
OCT
APR
MAY
FEB
JUN
NOV
JUL
MAR

,
,

,
,
,
,
,

,
,
,
WEIGHTED AVERAGE PRICE USDMT
QUANTITY SOLD  MT

10
AMF
Anhydrous Milk Fat.
BMP
Butter Milk Powder.
DIRA
Dairy Industry Restructuring
Act 2001 (New Zealand).
Farmgate Milk Price
The price for milk supplied in
New Zealand to Fonterra by
farmer shareholders.
Fluid and Fresh Dairy
The Fonterra grouping
of fluid milk products
(skim milk, whole milk
and cream – pasteurised
or UHT processed),
concentrated milk products
(evaporated milk and
sweetened condensed milk)
and yoghurt.
GDT
GlobalDairyTrade, the
online provider of the twice
monthly global auctions of
dairy ingredients.
kgMS
Kilogram of milk solids, the
measure of the amount of
fat and protein in the milk
supplied to Fonterra.
LME (Liquid Milk
Equivalent)
A standard measure of the
amount of milk (in litres)
allocated to each product
based on the amount of fat
and protein (“milk solids”) in
the product relative to the
amount of fat and protein in
a standardised raw milk.
Non-Reference Products
All dairy products, except
for Reference Products,
produced by the NZ
Ingredients business.
Reference Products
The dairy products used
in the calculation of the
Farmgate Milk Price, which
are currently WMP, SMP,
BMP, butter and AMF.
Season
New Zealand: A period
of 12 months to 31 May
in each year.
Australia: A period of
12 months to 30 June
in each year.
SMP
Skim Milk Powder.
WMP
Whole Milk Powder.

GLOSSARY