Global Dairy Update January 2019

1
GLOBAL DAIRY
UPDATE
JANUARY 2019
KEY DATES
28 February 2019
Final date for Applications to
Supply Fonterra
May 2019
Q3 Business Update
20 March 2019
FY19 Interim Results
Announcement
1 June 2019
Measurement Date for Share
Standard 2019/20 Season
• Production in New Zealand up on last year.
US production growth remains steady, EU
growth is easing and Australia is declining.
• Exports from Australia and the US continue
to grow. European and New Zealand
exports increased.
• Imports into Asia and China showed
strong growth. Latin America increased but
Middle East and Africa down.
• Fonterra’s milk collection across
New Zealand for the seven months to
31 December reached 914 million kgMS, up
4% on the same period last season.
• Fonterra Farm Source™ to sell livestock division to
Carrfields Livestock.
• Fonterra has increased supply from over 300 to over 500
McDonald’s restaurants across China for the chain’s iconic
soft serve ice creams.

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To view a chart that
illustrates year-on-year
changes in production –
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2
OUR MARKETS
GLOBAL PRODUCTION
PRODUCTION IN
NEW  ZEALAND UP ON
LAST YEAR. US PRODUCTION
GROWTH REMAINS STEADY,
EU GROWTH IS EASING AND
AUSTRALIA IS DECLINING
Total New Zealand milk
production increased 4% in
December compared to the
same month last year.
Favourable weather
conditions supported peak
collection with production
returning to more usual
production levels following
two previous seasons that
were impacted by weather.
New Zealand milk
production for the 12 months
to December was 2% higher
than last year.
Fonterra collections are
reported for December, see
page 5 for details. 
Australian milk
production decreased 6%
in October compared to the
same period last year.
Production for the 12 months
to October is marginally
ahead of the previous
12 months.
Drought, high input costs
and increased cow cull rates,
continue to severely impact
milk production. Dairy
Australia has forecast a milk
production decline of 5% to
7% for the season.
Fonterra collections in
Australia are reported
for December, see page 5
for details.
EU milk production
decreased 1% in November
compared to the same
period last year.
In November The
Netherlands experienced
the largest monthly decline
and France and Germany
also continued to decline.
Stronger milk production
continues in Ireland.
Production for the 12 months
to November was up 1%
compared to the same
period last year. Growth has
slowed but has remained
steady since August.
US milk production was up
1% in November compared
to the same period last year.
The US continues to see
relatively steady production
growth driven by increased
yield per cow.
Margins continue to be
squeezed with Class III
milk below USD15.00 per
hundredweight. The new
Dairy Margin coverage
programme may assist
production on smaller farms
but overall US growth is
expected to continue at
current levels which are
below those observed over
the past several years.
Milk production for the
12 months to November
increased by 1% compared to
the same period last year.
NEW ZEALANDAUSTRALIAEUROPEAN UNIONUSA
Production change
for the 12 months to
October 2018
Production change
for the 12 months to
December 2018
Production change
for the 12 months to
November 2018
Production change

for the 12 months to
November 2018
2011

%
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illustrates year-on-year
changes in exports –
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OUR MARKETS
GLOBAL EXPORTS
EXPORTS FROM AUSTRALIA
AND THE US CONTINUE
TO GROW. EUROPEAN
AND NEW  ZEALAND
EXPORTS  INCREASED
Total New Zealand dairy
exports increased by 13%,
or 40,000 MT, in November
compared to the same
period last year. This was
primarily driven by WMP, up
27,000 MT. Fluid products,
AMF, SMP, MPC and infant
formula were up a combined
22,000 MT. Butter declined
9,000  MT.
Exports for the 12 months to
November were up 1%, or
43,000 MT, on the previous
comparable period. This was
driven by fluid products,
WMP, infant formula, AMF
and butter, up a combined
114,000 MT. This was off-set
by declines in SMP, cheese
and cultured products down
a combined 61,000  MT.
EU dairy exports increased
by 12%, or 53,000 MT, in
October compared to the
same period last year. This
was primarily driven by
SMP, fluid products, cheese,
lactose and WPC, up a
combined 53,000  MT.
Exports for the 12 months
to October were up 1%, or
73,000 MT, on the previous
comparable period.
There was continued growth
in a broad range of products,
led by infant formula and
SMP, offset by declines in
fluid milk products and WMP.
US dairy exports increased
by 3%, or 5,000 MT, in
October compared to
the same period last year.
Growth in SMP, WMP
and AMF of a combined
15, 000 MT, was the primary
driver behind this increase.
Exports for the 12 months
to October were up 13%, or
291,000 MT, on the previous
comparable period.
The increase was across a
broad range of products
notably SMP, lactose, WPC
and WMP, up a combined
231,000  MT.
Australian dairy exports
increased 13%, or 9,000  MT,
in November compared
to the same period last
year. This growth was due
to infant formula, fluid
products, SMP and butter up
a combined 10,000 MT. This
was off-set by a decline in
cheese of 1,500  MT.
Exports for the 12 months to
November were up 6%, or
41,000 MT, on the previous
comparable period.
Fluid and fresh dairy, cheese,
and infant formula continued
to make up most of growth
in Australian exports, up a
combined 35,000  MT.
NEW ZEALANDAUSTRALIAEUROPEAN UNIONUSA
1361
1
Export change for the 12
months to October 2018
Export change for the 12
months to November 2018
Export change for the 12
months to November 2018
Export change for the 12
months to October 2018
%

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%
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illustrates year-on-year
changes in imports –
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OUR MARKETS
GLOBAL IMPORTS
IMPORTS INTO ASIA AND
CHINA SHOWED STRONG
GROWTH. LATIN AMERICA
INCREASED BUT MIDDLE EAST
AND AFRICA  DOWN
Latin American dairy
import volumes¹ increased
16%, or 24,000 MT, in
October compared to the
same period last year. This
increase was primarily driven
by WMP, SMP, cheese and
fluid products up a combined
20,000 MT. All other product
categories were also up.
Imports for the 12 months
to October were up 1%,
or 19,000 MT, compared
to the same period the
previous year.
Asia (excluding China)
dairy import volumes¹
increased 14%, or 51,000  MT,
in October compared to
the same period last year.
Growth was across a broad
range of products off-set by
small declines in butter, whey
and other powders.
Imports for the 12 months
to October were up 5%, or
208,000 MT, compared to
the same period the previous
year. This growth was driven
by fluid products, WMP and
cheese of 180,000  MT.
Middle East and Africa
dairy import volumes¹
decreased 6% or 19,000 MT
in October compared to
the same period last year.
Small growth in SMP and
WMP products was offset
by declines in most other
product categories totalling
25,000  MT.
Imports for the 12 months
to October were down 6%,
or 237,000 MT, compared
to the same period the
previous year. The reduction
was driven by fluid and fresh
dairy and cheese, down
a combined 239,000  MT.
This was off-set by a small
increase in SMP.
China dairy import
volumes increased 8%, or
20,000 MT, in November
compared to the same
period last year. This was
driven by increases across
a broad range of products,
off-set by small declines
in infant formula and
whey powder.
Imports for the 12 months
to November were up 7%,
or 255,000 MT, compared
to the same period last year.
Strong demand out of China
continued with imports
across all key categories,
except cheese, up for
the period.
LATIN AMERICAASIAMIDDLE EAST & AFRICACHINA
Import change for the 12
months to November 2018
Import change for the 12
months to October 2018
Import change for the 12
months to October 2018
Import change for the 12
months to October 2018
57
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1
1 Estimates are included for those countries that have not reported data.

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To view a table that shows our
detailed milk collection in New
Zealand and Australia compared
to the previous season –
VOLUME M LITRESDAY
JUNJULAUGSEPOCTNOVDECJANFEBMARAPRMAY










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OUR MARKETS
FONTERRA MILK COLLECTION 2018/19 SEASON
NEW ZEALANDNORTH ISLANDSOUTH ISLANDAUSTRALIA
Increase for the season from
1 June to 31 December
Increase for the season from
1 June to 31 December
Increase for the season from
1 June to 31 December
Decrease for the season
from 1 July to 31 December
445
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NEW ZEALAND MILK COLLECTION
Fonterra’s milk collection
across Australia for the six
months to 31 December
reached 72 million kgMS,
down 14% on the same
period last season.
Australia collections in
December reached 13 million
kgMS, down 18% on the
same month last season.
High input costs and
poor seasonal conditions
continue, resulting in
increased cow cull rates,
decreasing the season’s
milk production.
As national volumes
decline, the milk supply
market continues to be
highly competitive.
North Island milk
collection in December was
109 million kgMS, 7% higher
than December last season.
Milk production in Central
Districts and Waikato
continues to track above last
season due to good spring
and on-farm conditions.
North Island milk collection
for the 2018/19 season to
date reached 567 million
kgMS, up 4%.
South Island milk
collection in December was
76 million kgMS, 2% higher
than December last season.
Warm and dry weather in
December has improved
pasture growth in Otago/
Southland where flooding
had occurred during
November. Favourable
conditions are expected to
continue, with grass growth
looking secure throughout
early summer.
Good grass growth and
pasture cover in Canterbury.
South Island milk collection
for the 2018/19 season to
date reached 347 million
kgMS, up 5%.
Fonterra’s milk collection
across New Zealand for
the seven months to
31 December reached
914 million kgMS, up 4% on
the same period last season.
New Zealand collections in
December were 185 million
kgMS, 5% up on the same
month last season.
The mix of fine weather
and rain in December saw
soil moisture and pasture
levels recover across most of
the country.
Overall good animal health
and favourable weather
resulted in milk volumes
ahead of last season,
which was a three-year low
where weather conditions
and other factors had an
adverse impact.

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To view more information,
including a snapshot of the
rolling year-to-date results –
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GDT PRICE INDEXNZDUSD SPOT RATE
JAN NOV MAR JUN AUG NOV JAN MAR JUN AUG JAN


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, 
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PRICE INDEX
NZD  USD
OUR MARKETS
FONTERRA GLOBAL DAIRY TRADE RESULTS
Fonterra GDT sales
by destination:
Dairy commodity prices
and New Zealand
dollar trend
The New Zealand dollar
declined in December as a
weakening global outlook
and soft domestic growth
data impacted the currency,
but has subsequently
increased in January.
Fonterra GDT results at
last trading event
15 January 2019:
The next trading event will be held on 5 February 2019. Visit www.globaldairytrade.info for more information.
Change in Fonterra’s
weighted average product
price from previous event
2.9
Fonterra’s weighted
average product price

(USD/MT)
3,094
USD
Fonterra product quantity
sold on GDT
000’ MT
27.0
NORTH ASIA (INCLUDING CHINA)
SOUTH EAST ASIA
MIDDLE EAST AND AFRICA
LATIN AMERICA
OTHER
USD 2,441/MT
10.7
SMP
USD 4,262/MT
4.6
BUTTER
USD 3,504/MT
4.0
CHEDDAR
USD 5,294/MT
3.1
AMF
USD 2,777/MT
2.7
WMP
USD 5,047/MT
1.5
RENNET CASEIN
26,951
MT
LATEST AUCTION
433,044
MT
FINANCIAL
YEAR‑TO‑DATE

Fonterra Farm Source™
to sell livestock division
to Carrfields Livestock
Fonterra has announced that
it will sell the Farm Source™
livestock division to
Carrfields Livestock – an
established livestock
agency provider.
Richard Allen, Farm Source™
Stores Director, says the
decision to sell was made in
the context of a larger review
underway within the Co-op.
“In the context of the
review of the Co-op’s
assets and investments, we
have made the decision to
sell the livestock division
to Carrfields Livestock.
This will better serve the
livestock team and the farms
they service.
While Farm Source’s
livestock division has
contributed positive returns
since inception, we believe
the investment required
to maintain and grow
this division can be more
effectively targeted towards
improving core areas of the
Farm Source™ business,” says
Mr. Allen.
Farm Source™ is working
with Carrfields to develop
a range of partnership
offerings to ensure a
positive connection and
competitive offer remains for
Fonterra farmers.
Craig Carr, Carrfields Group
Managing Director, says this
acquisition is both exciting
and a strategic opportunity
for Carrfields Livestock to
fill gaps in their current
national network.
“This acquisition will take
the Carrfields Livestock
team to over 150 livestock
agents spread right across
the country. This strategic
partnership will offer
Farm Source™ clients and
Fonterra farmer owners
access to a nationwide
agent and sale yard network
provided by a New Zealand
family-owned business,” says
Mr. Carr.
Farm Source™ and
Carrfields Livestock are
committed to ensuring
a smooth transfer of
employees and clients,
minimising any disruption
to the business with
Carrfields Livestock’s
ownership commencing
1 March 2019. For a small
number of employees
who will not have the
option to transition to
Carrfields Livestock,
Farm Source™ will support
them in identifying new
opportunities within
the Co-op.
McDonald’s China
serving up 37.5 million
Fonterra soft serves
Over 500 McDonald’s
restaurants across China
are serving up a taste of
New Zealand, with Fonterra
now supplying product for
the restaurant chain’s iconic
soft serve ice creams.
Around 37.5 million soft
serve ice creams are being
made with Fonterra’s dairy –
roughly one every second.
The product, sourced from
New Zealand farms, has
been served in more than
300 restaurants across China
since September last year
and increased to more than
500 stores on 1 January 2019.
To put that in context,
there are 167 McDonald’s
restaurants across
New  Zealand.
President of Fonterra Greater
China Christina Zhu says
the deal is part of Fonterra
growing its foodservice
business in China.
“We’re delighted to be
expanding our partnership
with McDonald’s China,
who we already supply
slice-on-slice cheese and
UHT milk.”
“McDonald’s China chose
to source milk powder from
Fonterra to make their
vanilla ice cream after our
product received the highest
sensory score (flavour,
colour, stability) in their
pilot. It also speaks to our
innovation and food safety
and quality standards.”
China is the world’s biggest
ice cream market, scooping
up around 4.3 billion litres
in 2016.
“Ice cream sales in China are
rising steadily and Fonterra is
primed to meet the demand,”
says Ms. Zhu.
“Our Foodservice
business is a leader in
China’s foodservice
market, with customers
valuing our trusted brand,
product innovation, and
premium quality.”
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OUR PERFORMANCE

PRODUCTION
AUSTRALIAAVERAGE
UNITED STATES
NEW ZEALANDEU
DEC JUL JUN MAY MAR FEB JAN SEP NOV OCT AUG APR 
LIQUID MILK M LITRES







EXPORTS
AUSTRALIA
UNITED STATES
NEW ZEALANDEU
AUG JUL JUN APR MAR FEB JAN DEC NOV OCT SEP MAY 
MT s







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








AVERAGE
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SUPPLEMENTARY INFORMATION
Global Dairy Market
The charts on the right
illustrate the year-on-year
changes in imports, exports
and production for a range of
countries that are important
players in global dairy trade.
The absolute size of
the bars represents the
change in imports, exports
or production, relative
to the same period the
previous year.
Averages are shown where
data is complete for the
regions presented.
NOTE: Data for EU, US and Australia to November; New Zealand to December.
NOTE: Data for EU and US to October; New Zealand and Australia to November.
NOTE: Data for China to November; Asia, Middle East and Africa, Latin America to October.
SOURCE: Government milk production statistics/GTIS trade data/Fonterra analysis.

WEIGHTED AVERAGE PRICEQUANTITY SOLD
APR 
MAR 
NOV 
DEC 
JAN JUL 
AUG 
MAY 
SEP 
FEB 
OCT 
JUN 

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WEIGHTED AVERAGE PRICE USDMT 
QUANTITY SOLD  MT 
9

SUPPLEMENTARY INFORMATION
Fonterra milk
production
The table on the right
shows Fonterra milk solids
collected in New Zealand
and Australia compared
to the previous season.
MILK COLLECTION
(MILLION KGMS)
DECEMBER
2018
DECEMBER

2017
MONTHLY
CHANGE
SEASON-
TO-DATE
2018/19
SEASON-
TO-DATE
2017/18
SEASON-
TO-DATE
CHANGE
Total Fonterra
New Zealand
185.1176.15.1%913.6877.64.1%
North Island109.2101.77.3%566.6546.43.7%
South Island75.974.42.1%347.0331.24.8%
Fonterra Australia13.015. 9(18.2%)72.484.5(14.3%)
Fonterra GDT results
This table provides more
information on the latest
results, including a snapshot
of the year-to-date results.
LAST TRADING EVENT
(15 JANUARY 2019)
YEAR-TO-DATE

(FROM 1 AUGUST 2018)
Quantity Sold on GDT
(Winning MT)
26,951433,044
Change in Quantity Sold on GDT
over same period last year
20.7%16.2%
Weighted Average Product Price
(USD/MT)
3,0942,946
Change in Weighted Average
Product Price over same period
last year
(8.4%)(8.8%)
Change in Weighted Average
Product Price from previous event
2.9%–
Fonterra GDT Results
This chart shows Fonterra
GDT prices and volumes over
the past 12 months.

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
Global Dairy Trade, 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