Fonterra Shareholders Fund : Global Dairy Update February 2022

onlyFEBRUARY 2022

Global Dairy useUPDATE

Our Markets

personal	• Monthly production decline observed across
all regions.
		• Australia and New Zealand exports up. US and
		EU monthly exports decline.
		• China monthly imports decline. Middle East
		and Africa, Latin America and Asia monthly
		imports up.
For	• Fonterra New Zealand milk collection for
		January was 158.1 million kgMS, down 6.1% on
		January the prior season.
		• Fonterra Australia milk collection for January
		was 9.3 million kgMS, down 4.2% on January
		last season.

Our Performance

• Fonterra, NZX and EEX enter GDT partnership for future growth.

Our Co-op

• Carbon Zero Simply Milk range expands.

Key Dates

17 March 2022	May 2022
FY22 Interim Results Announcement	FY22 Q3 Business Update

1

OUR MARKETS

Global Production

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use
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illustrates year-on-year
changes in production -
	CLICK HERE
personalJanuary compared to January

NEW ZEALAND

6.1%

Change for January 2022 compared to January 2021

0.7%

Change for the 12 months to

January 2022

Monthly production decline observed across all regions

AUSTRALIAEUROPEAN UNION USA

1.2	0.8	%	1.6	%
%
Change for December 2021	Change for November 2021	Change for January 2022
compared to December 2020	compared to November 2020	compared to January 2021
%	%		%
0.9Change for the 12 months	0.1Change for the 12 months	1.0Change for the 12 months
to December 2021	to November 2021	to January 2022

New Zealand milk production¹ decreased

6.1% on a litres basis, (down

6.1% on milk solids basis) in

the year prior.

ForWarm and very dry weather across most regions throughout January have impacted soil moisture and milk production.

New Zealand milk production for the 12 months to January was down 0.7% on the year prior.

Fonterra New Zealand collections are reported for January, see page 5 for details.

Australia milk production decreased 1.2% in December compared to December the year prior.

COVID-19 outbreaks and isolation requirements are impacting labour availability and supply chains on farm. Combined with early dry‑offs, sustained cull rates and reduced milking interval, this is negatively impacting milk production.

Australia milk production for the 12 months to December was 0.9% lower than the year prior.

Fonterra collections in Australia are reported for January, see page 5 for details.

EU milk production² decreased 0.8% in November compared to the same period the year prior.

Lower production volumes year-on-year were driven by Germany, France and Netherlands but partially offset by an increase in Italy's production.

EU milk production for the

12 months to November was down 0.1% compared to the same period the year prior, was also driven by declines in Germany, France and Netherlands and offset by increases in Italy and Ireland.

US milk production

decreased by 1.6% in January, compared to the same period the year prior.

Weaker production was observed for the third consecutive month. This was driven by continuing herd size contractions and lower milk per cow, and reflecting increasing input costs.

Milk production for the

12 months to January was

1.0% higher compared to the same period the year prior.

1. New Zealand production is measured in litres.
2. Excludes UK.

2

OUR MARKETS

Global Exports

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changes in exports -
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personaleriod the year prior.

NEW ZEALAND

0.6%

Change for December 2021 compared to December 2020

4.0%

Change for the 12 months to December 2021

Australia and New Zealand monthly exports up.

US and EU monthly exports decline

AUSTRALIAEUROPEAN UNION USA

53.1	1.6%	2.7
%		%
Change for December 2021	Change for November 2021	Change for December 2021
compared to December 2020	compared to November 2020	compared to December 2020
18.8	0.2%	10.2%
%
Change for the 12 months	Change for the 12 months	Change for the 12 months
to December 2021	to November 2021	to December 2021

Total New Zealand dairy xports increased by 0.6%,

or 2,229 MT, in December compared to the same

Shipments of fluid milk Forp oducts, infant formula and

WMP increased year-on-year, as well as MPC and WPC but were partially offset by lower shipments of SMP and cheese.

Exports for the 12 months to December were up by 4.0%, or 135,499 MT, on the previous comparable period. This was primarily driven by increases in WMP, fluid milk product and cheese but partially offset by declines in AMF and SMP.

Australia dairy exports increased 53.1%, or 38,107 MT, in December compared

to the same period the year prior.

The significant increase in December relative to the same month the prior year is driven by continued high demand from China for fluid milk products, up 24,627 MT, and an increase in SMP and cheese exports.

Exports for the 12 months to December were up 18.8%, or 141,673 MT, on the previous comparable period and reflect the significant increase on November and December.

This was predominantly driven by increases in fluid milk products, and also SMP and WMP.

EU dairy exports decreased 1.6%, or 8,918 MT, in November compared

to the same period the year prior.

Lower exports of cheese, SMP and cultured products, down a combined 22,336 MT, were partially offset by stronger demand for MPC and butter.

Exports for the 12 months to November were up 0.2%, or 15,617 MT, on the previous comparable period, driven by increases in fluid milk products and whey, and partially offset by declines in infant formula, cultured products, WMP and butter.

US dairy exports decreased 2.7%, or 5,247 MT, in December compared to the same period the year prior and marks the end of a 10‑month period of year-on-year gains.

Lower demand for WPC in China, whey in Vietnam and SMP in Indonesia were partially offset by an increase in cheese to Japan and lactose to China.

Exports for the 12 months to December were up 10.2%, or 255,605 MT, on the previous comparable period, driven by SMP, whey, cheese, fluid milk products and butter, up a combined 242,722 MT.

3

OUR MARKETS

Global Imports

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illustrates year-on-year
changes in imports -
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personalsame period the year prior.

LATIN AMERICA

7.6%

Change for November 2021 compared to November 2020

3.7%

Change for the 12 months to November 2021

China monthly imports decline. Middle East and Africa, Latin America and Asia monthly imports up

ASIAMIDDLE EAST & AFRICA CHINA

7.5%	18.4%	13.0%
Change for November 2021	Change for November 2021	Change for December 2021
compared to November 2020	compared to November 2020	compared to December 2020
0.5Change for the 12 months	Change5.0for the 12 months	18.0Change for the 12 months
%	%	%
to November 2021	to November 2021	to December 2021

Latin America dairy import volumes¹ increased 7.6%, or 10,356 MT, in November compared to the

The increase was driven by Forhigher demand for cheese

and whey to Mexico and SMP to Dominican Republic.

Imports for the 12 months to November were up 3.7% compared to the same period the year prior, driven by increases in cheese, SMP and fluid milk products and partially offset by declines in WMP.

Asia (excluding China) dairy import volumes¹ increased 7.5%, or 29,498 MT, in November compared

to the same period the year prior.

The increase was driven by higher demand for SMP and cultured products

to Philippines, and whey to Vietnam.

Imports for the 12 months to November were down 0.5%, or 26,757 MT, compared

to the same period the year prior, driven by lower volumes of WMP and SMP, and offset by an increase in whey and cheese.

Middle East and Africa dairy import volumes¹ increased 18.4%, or

70,513 MT, in November compared to the same period the year prior.

The increase was predominantly driven by higher volumes of SMP to Algeria and Libya, fluid milk products and cheese to Iraq and Libya.

Imports for the 12 months to November were up 5.0%, or 249,509 MT, compared to November the year prior, driven by increases in cheese, fluid milk products, cultured products and ice cream.

China dairy import volumes decreased by 13.0%, or 42,365 MT, in December compared to December 2020, which was a record month for China imports.

Declines were observed in WMP and SMP import volumes as supply is limited. Whey imports were also down as hog herds in China decline, decreasing the demand for whey as feed.

Imports for the 12 months to December were up 18.0%, or 630,474 MT, driven by fluid milk products, WMP, whey and SMP, partially offset by decreases in infant formula.

1 Estimates are included for those countries that have not reported data.

4

OUR MARKETS

Fonterra Milk Collections

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use
To view a table that shows our
	detailed milk collection in New
	Zealand and Australia compared
	to the previous season -
personal		CLICK HERE
to-date collections were

New Zealand Milk Collection

LITRESDAY	•
•
M
VOLUME

JUN

JUL

AUG

SEP

OCT

NOV

DEC

JAN

FEB

MAR

APR

MAY

NEW ZEALAND

6.1%

Change for January 2022 compared to January 2021

3.6%

Season-to-date

1 June to 31 January

Fonterra's New Zealand collections for January were 158.1 million kgMS, 6.1% lower than last January. Season-

1,032.6 million kgMS, 3.6% behind last season.

ForHot, dry weather across most f the country for the month f January led to much lower milk collections compared to

last season.

NORTH ISLAND

9.5%

Change for January 2022 compared to January 2021

4.1%

Season-to-date

1 June to 31 January

North Island milk collections in January were

86.8 million kgMS, 9.5% lower than January last season. Season-to-date collections were 629.0 million kgMS, 4.1% behind last season.

North Island milk collections continued to decline. January had high temperatures and was very dry for the whole month, contributing to feed deficits and heat stress.

SOUTH ISLAND

1.4%

Change for January 2022 compared to January 2021

2.8%

Season-to-date

1 June to 31 January

South Island milk collections in January were 71.3 million kgMS, 1.4% lower than last January. Season- to-date collections were

402.7 million kgMS, 2.8% behind last season.

The South Island was less impacted than the North Island by the hot and dry weather, with rain giving some relief to feed supply. Otago and Southland were the only region where January milk collections were above last season.

AUSTRALIA

4.2%

Change for January 2022 compared to January 2021

1.6%

Season-to-date

1 July to 31 January

Fonterra'sAustralia collections for January were 9.3 million kgMS, a 4.2% decrease on January last season as third party volumes decreased and farm collections were flat year- on-year.Fonterra collections across Australia for the seven months for the season-to-date were 67.6 million kgMS, a 1.6% decline on last season.

Summer rainfall deficits across Western Victoria and Tasmania are impacting production with reduced pasture and summer crop being fed and which is being

Outlook for Fonterra in New Zealand

per	9.30-	1,480M
NZD	9.90
kgMS	kgMS

substituted by low quality silage harvested this spring.

Forecast Farmgate Milk Price for the 2021/22 season

Forecast milk collection for the 2021/22 season

5