Continued drought-like conditions in key dairy farming regions has seen Fonterra revise its forecast milk collections for the 2020 season.
In a market update, the dairy giant has reaffirmed its forecast farmgate milk price range of $7.00-7.60 per kgMS and its forecast full-year underlying earnings guidance of 15-25 cents per share.
However it has revised its forecast milk collections for the 2020 season down from 1,530 million kgMS to 1,515 million kgMS.
Fonterra CEO Miles Hurrell said it was due to weather conditions in some parts of the country.
"We have recently seen a reduction in milk collections and our farmers are facing ongoing challenging weather.
"We'll continue to work with them to ensure that if they need extra support that they are able to access it," said Hurrell.
Meanwhile Hurrell said the co-operative was confident in its forecast farmgate milk price range despite current market conditions as a result of coronavirus.
"The momentum we saw in the first three months of the financial year has continued, and as we approach the interim results our underlying earnings are tracking well. However, given the potential significant risks that could arise from coronavirus in the second half, we are taking a prudent approach and maintaining our full-year forecast earnings range.
"The current situation is very fluid and uncertain. However, we have already contracted a high percentage of our 2020 financial year's milk supply and this is helping us manage the impact of coronavirus."
While there had been a slow-down in processing of containers at ports, Fonterra products were continuing to be cleared by customs and quarantine officials.
"In China, people continue to face movement restrictions due to the outbreak. This means many restaurants and food outlets are closed, which is having a major impact on the operations of our Foodservice customers. Our sales teams are working with these customers to help them where they can."
A further update on the impact of coronavirus would be provided when Fonterra announces its interim result on March 18.
