Fonterra Shareholders Fund : Global Dairy Update November 2021

onlyNOVEMBER 2021

Global Dairy useUPDATE

Our Markets

personal	• New Zealand, Australia and US monthly
production down. EU production flattens.
		• New Zealand monthly exports up.
		Australia, US and EU monthly exports
		continue to grow.
		• China and Middle East and Africa monthly
		imports decline. Asia and Latin America
		monthly imports up.
For	• Fonterra New Zealand milk collection for
October was 207 million kgMS, down 2.9% on
the prior season.
• Fonterra New Zealand full season
forecast milk collection confirmed at
1,525 million kgMS, down on last season's
1,539 million kgMS.
		• Fonterra Australia milk collection for October
		was 11.8 million kgMS, down 4.8% on
		last season.

Key Dates

December to February 2022	9 December 2021
Application Period to	Fonterra Co-operative Group
Supply Fonterra	Annual Meeting

Our Performance

• First quarter business update.

For further details,	CLICK HERE
view our website -
• Partnering with VitaKey.

Our Co-op

• A day in the life of a Tanker Operator.

Coming Up …

• The next issue of the Global Dairy Update will be published on 28 January 2022.

13 December 2021	March 2022
Fonterra Shareholders' Fund	FY22 Interim Results
Annual Meeting	Announcement

1

OUR MARKETS

Global Production

only
use
To view a chart that
illustrates year-on-year
changes in production -
	CLICK HERE
personalin October compared to

NEW ZEALAND

3.3%

Change for October 2021 compared to October 2020

0.6%

Change for the 12 months to

October 2021

New Zealand, Australia and US monthly production down.

EU production flattens

AUSTRALIAEUROPEAN UNION USA

2.9	0.2	0.5
%	%	%
Change for September 2021	Change for September 2021	Change for October 2021
compared to September 2020	compared to September 2020	compared to October 2020
%	%	%
0.7Change for the 12 months	0.2Change for the 12 months	1.9Change for the 12 months
to September 2021	to September 2021	to October 2021

New Zealand milk production¹ decreased 3.3% on a litres basis, (down 3.1% on milk solids basis)

October last year.

ForChangeable weather patterns across the country impacted production for the third consectutive month.

New Zealand milk production for the 12 months to October was 0.6% higher than last year.

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

Australia milk production decreased 2.9% in September compared to September last year.

Dairy Australia and Rabobank have forecast 0% to 2% growth for FY22. Production figures through to September

2021 increasingly point to a decline in FY22.

Australia milk production for the 12 months to September was 0.7% lower than

last year.

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

EU milk production² decreased 0.2% in September compared to the same period last year.

Lower production volumes from Germany and the Netherlands continued and were partially offset by strong output from Italy and Ireland.

EU milk production for the

12 months to September was up 0.2% compared to the same period last year, driven by higher volumes across several countries including Ireland, Italy, Hungary

and Poland.

US milk production decreased by 0.5% in October, compared to the same period last year.

Rising input costs contributing to herd size contractions as well as lower milk per cow yield, are impacting milk production.

Milk production for the

12 months to October was

1.9% higher compared to the same period last year.

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

2

OUR MARKETS

Global Exports

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use
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changes in exports -
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personaleriod last year.

NEW ZEALAND

0.6%

Change for October 2021 compared to October 2020

4.5%

Change for the 12 months to October 2021

New Zealand monthly exports up. Australia, US and EU monthly exports continue to grow

AUSTRALIAEUROPEAN UNION USA

38.0	3.4	%	14.2
%		%
Change for September 2021	Change for August 2021	Change for September 2021
compared to September 2020	compared to August 2020	compared to September 2020
12.8%	0.5%	9.5%
Change for the 12 months	Change for the 12 months	Change for the 12 months
to September 2021	to August 2021		to September 2021

Total New Zealand dairy xports increased by 0.6%,

or 1,654 MT, in October compared to the same

Cheese exports increased Foryear-on‑year and SMP export

to China continue to be strong. These were partially

ffset by lower shipments of butter and infant formula.

Exports for the 12 months to October were up by 4.5%, or 155,715 MT, on the previous comparable period. This was primarily driven by WMP, cheese and fluid milk products.

Australia dairy exports increased 38.0%, or

23,364 MT, in September compared to the same period last year.

Fluid milk products to China continue to be in high demand, together with increased cheese exports.

Exports for the 12 months to September were up 12.8%, or 95,022 MT, on the previous comparable period.

This was predominantly driven by increases in fluid milk products, SMP and WMP but partially offset by declines in infant formula.

EU dairy exports increased 3.4%, or 19,197 MT, in August compared to the same period last year.

August exports reflected higher sales of fluid milk products to Mauritania and United Arab Emirates and of cheese and butter to the US, up a combined 29,228 MT.

Exports for the 12 months to August were down 0.5%, or 32,366 MT, on the previous comparable period. Infant formula, cultured products, butter and SMP were the main drivers of this decline but partially offset by an increase in fluid milk products.

US dairy exports increased 14.2%, or

28,029 MT, in September compared to the same period last year with gains observed across most product categories.

Sustained strong demand for SMP and cheese from Mexico as well as cheese from Japan are driving this increase. Exports of whey to China and fluid milk products are also contributing to

the increase.

Exports for the 12 months to September 2021 were up 9.5%, or 238,085 MT, on the previous comparable period, driven by whey, SMP, butter, fluid milk products and WPC up a combined 221,652 MT.

3

OUR MARKETS

Global Imports

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illustrates year-on-year
changes in imports -
	CLICK HERE
personaleriod last year.

LATIN AMERICA

5.0%

Change for August 2021 compared to August 2020

2.9%

Change for the 12 months to August 2021

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

ASIAMIDDLE EAST & AFRICA CHINA

20.5%	5.9%	5.6%
Change for August 2021	Change for August 2021	Change for October 2021
compared to August 2020	compared to August 2020	compared to October 2020
1.3Change for the 12 months	Change2.5for the 12 months	21.8Change for the 12 months
%	%	%
to August 2021	to August 2021	to October 2021

Latin America dairy import volumes¹ increased 5.0%, or 8,906 MT, in August compared to the same

The increase was driven by Forhigher demand for cheese in the Dominican Republic,

Mexico and Chile.

Imports for the 12 months to August were up 2.9%, or 58,121 MT, compared to the same period last year.

Asia (excluding China) dairy import volumes¹ increased 20.5%, or

81,949 MT, in August compared to the same period last year.

The increase was driven by higher demand for whey in Vietnam, SMP in Pakistan and Thailand and cheese in Japan.

Imports for the 12 months to August were down 1.3%, or 64,958 MT, compared to the same period last year, driven by lower volumes of WMP and SMP, and offset by fluid milk product and cheese.

Middle East and Africa dairy import volumes¹ decreased 5.9%, or 28,896 MT, in August compared to the same period last year.

The decrease was predominantly driven by lower volumes of SMP to Ethiopia, WMP to Algeria and infant formula to Nigeria.

Imports for the 12 months to August were down 2.5%, or 119,881 MT, compared to August last year, driven by decreases in WMP, SMP and fluid milk products.

China dairy import volumes decreased by 5.6%, or 15,782 MT, in October compared to the same period last year. This is the second consecutive month of decline following six months of year-on‑yeargrowth.

Declines in infant formula, fluid milk products, whey and WMP import volumes were observed in October

Imports for the 12 months to October were up 21.8%. or 745,795 MT, driven by fluid milk products, WMP, whey and SMP and 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
collections were 510.9 million

New Zealand Milk Collection

LITRESDAY	•
•
M
VOLUME

JUN

JUL

AUG

SEP

OCT

NOV

DEC

JAN

FEB

MAR

APR

MAY

NEW ZEALAND

2.9%

Change for October 2021 compared to October 2020

3.2%

Season-to-date

1 June to 31 October

Fonterra's New Zealand collections for October were 207.0 million kgMS, 2.9% down on last October. Season-to-date

kgMS, 3.2% behind last season.

October was warmer than Fornormal, particularly during the

second half of the month, in addition to the usual mixture of unsettled spring weather.

Improving weather conditions and expectations that milk collections for the balance of the season that are generally on par with last season support the current forecast of 1,525 million kgMS.

NORTH ISLAND

3.9%

Change for October 2021 compared to October 2020

2.7%

Season-to-date

1 June to 31 October

North Island milk collections in October were

123.5 million kgMS, 3.9% lower than October last season.

Season-to-date collections were 334.6 million kgMS, 2.7% behind last season.

Many eastern regions of the North Island were generally drier than average for the time of year, while Northland, Auckland, Coromandel and Bay of Plenty were much wetter than average.

SOUTH ISLAND

1.2%

Change for October 2021 compared to October 2020

4.1%

Season-to-date

1 June to 31 October

South Island milk collections in October were

83.5 million kgMS, 1.2% lower than October last season.

Season-to-date collections were 176.3 million kgMS, 4.1% behind last season.

Regular westerlies led to near normal rainfall across much of the South Island, although Kaikoura, north Canterbury and Southland were drier than average.

AUSTRALIA

4.8%

Change for October 2021 compared to October 2020

3.3%

Season-to-date

1 July to 31 October

Fonterra'sAustralia collections for October were 11.8 million kgMS, a 4.8% decrease on October last season. Farm collections increased 4.2% while third-partyvolumes decreased by 57.5%.

Fonterra collections across Australia for the season-to-date were 34.5 kgMS, a 3.3% decline on last season.

Average rainfall and cooler conditions this spring are reducing growth rates and pasture availability as farmers manage grazing rotations and silage preparation.

The inclusion of off‑GDT sales contributed approximately six cents per kgMS to the Milk Price for the season

to 31 October 2021.

Outlook for	NZD	8.40-	1,525M
New Zealand	per
	kgMS	9.00	kgMS
	Forecast Farmgate Milk Price for	Forecast milk collection for the
	the 2021/22 season	2021/22 season

5