Fonterra Shareholders Fund : Global Dairy Update July 2022

onlyJULY 2022

Global Dairy useUPDATE

Our Markets

personal	• New Zealand starts new season. US
production declines ease. Production declines
		across Australia and EU.
		• New Zealand and EU monthly exports decline.
		Australia exports continue strong growth and
		US monthly exports up.
		• China monthly imports down. Middle East &
		Africa, Latin America and Asia imports up.
For	• Fonterra New Zealand milk collections for
the first month of the 2022/23 season were
14.9 million kgMS, less than 1% of the full
season forecast.
• Fonterra Australia collections reached
105.5 million kgMS for the full 2021/22 season
to 30 June 2022, a 0.3% decrease compared
		with last season.

Key Dates

31 July 2022	22 September 2022
End of FY22 Financial Year	FY22 Annual Results
	Announcement

Our Performance

• Chief Innovation and Brand Officer Komal Mistry-Mehta shares how we're advancing our Active Living business.

Our Co-op

• Fonterra welcomes Milk-E, New Zealand's first electric milk tanker.

10 November 2022	14 November 2022
Fonterra Co-operative Group	Fonterra Shareholders' Fund
Annual Meeting	Annual Meeting

1

OUR MARKETS

Global Production

only
use
To view a chart that
illustrates year-on-year
changes in production -
	CLICK HERE
personalto the same period the

NEW ZEALAND

0.0%

Change for June 2022 compared to June 2021

4.3%

Change for the 12 months to June 2022

New Zealand starts new season. US production declines ease. Production declines across Australia and EU

AUSTRALIAEUROPEAN UNION USA

%	%	%
8.8	0.8	0.2
Change for May 2022	Change for April 2022	Change for June 2022
compared to May 2021	compared to April 2021	compared to June 2021
3.3%	0.0%	0.2%
Change for the 12 months	Change for the 12 months	Change for the 12 months
to May 2022	to April 2022	to June 2022

New Zealand milk production¹ was flat on a litres basis, (up 1.1% on milk solids basis) in June compared

year prior.

June production is typically very Forlow and represents about 1% of

the total season's production.

New Zealand milk production f r the 12 months to June was down 4.3% on the year prior.

onterra New Zealand collections are reported for June, see page 5 for details.

Australia milk production

decreased 8.8% in May compared to the same period the year prior.

Below average autumn rainfall, combined with labour constraints, and increasing input prices continue to impact milk production.

Australia milk production for the 12 months to May was 3.3% lower than the year prior.

Both Dairy Australia and Rabobank have revised their FY22 forecasts down to around -3.5% relative to the prior period.

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

EU milk production² was

down 0.8% in April compared to the same period the year prior as rising input costs and environmental protection plans impacted production across key producing regions.

Production declines were observed in Germany, Netherlands, Ireland and France and largely offset by increases in Italy and Poland.

EU milk production for the 12 months to April was flat compared to the same period the year prior. Increases in Italy, Ireland, Poland and Hungary were offset by declines

in Germany, Netherlands and France.

US milk production

increased by 0.2% in June, compared to the same period the year prior.

The year-on-year increase reversed a seven-month trend of consecutive declines and was driven by higher milk yield per cow as well as rising herd sizes.

Milk production for the

12 months to June was down

0.2% 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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use
To view a chart that
illustrates year-on-year
changes in exports -
	CLICK HERE
personaleriod the year prior.

NEW ZEALAND

15.0%

Change for June 2022 compared to June 2021

7.1%

Change for the 12 months to June 2022

New Zealand and and EU monthly exports decline. Australia exports continue strong growth. US monthly exports up

AUSTRALIAEUROPEAN UNION USA

31.6	15.5	6.3
%		%	%
Change for May 2022	Change for April 2022	Change for May 2022
compared to May 2021	compared to April 2021	compared to May 2021
19.6	5.5		4.6
%		%	%
Change for the 12 months	Change for the 12 months	Change for the 12 months
to May 2022	to April 2022		to May 2022

Total New Zealand dairy exports were down 15.0%, or 47,246 MT, in June compared to the same

The decrease was driven by Forlower shipments to China

of WMP and cheese as covid lockdowns restrictions continue to impact demand. WMP to United Arab Emirates and Sri Lanka also declined year on year.

Exports for the 12 months to June were down by 7.1%, or 253,646 MT, on the previous comparable period. This was primarily driven by decreases in WMP, cheese and butter.

Australia dairy exports increased 31.6%, or

19,236 MT, in May compared to the same period the year prior.

May exports continue to increase year on year. driven by high demand of fluid milk products and SMP from China. Increases in cheese and other powders were also observed.

Exports for the 12 months to May were up 19.6%, or 155,941 MT, on the previous comparable period.

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

EU dairy exports decreased 15.5%, or

100,493 MT, in April compared to the same period the year prior and reflect low milk production this season.

Lower exports volumes were driven by decreases in fluid milk products, SMP and whey, and partially offset by increases in cultured product and infant formula.

Exports for the 12 months to April were down 5.5%, or 400,353 MT, on the previous comparable period, driven by declines in fluid milk products, SMP, WMP, infant formula, and partially offset by increases in MPC and caseinate.

US dairy exports increased 6.3% in May compared to the same period the year prior.

Stronger demand for cheese by Mexico, South Korea and Japan, lactose to New Zealand and Japan and WPC to China is driving this increase. This is partially offset by lower shipments of SMP to Mexico and whey to China.

Exports for the 12 months to May were up 4.6%, or 122,323 MT, on the previous comparable period, driven by cheese, lactose, fluid milk products, butter and AMF.

3

OUR MARKETS

Global Imports

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use
To view a chart that
illustrates year-on-year
changes in imports -
	CLICK HERE
personaleriod the year prior.

LATIN AMERICA

6.0%

Change for April 2022 compared to April 2021

0.9%

Change for the 12 months to April 2022

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

ASIAMIDDLE EAST & AFRICA CHINA

%	9.5	%	%
2.7		22.2
Change for April 2022	Change for April 2022	Change for June 2022
compared to April 2021	compared to April 2021	compared to June 2021
%		%	%
4.1Change for the 12 months	Change8.8for the 12 months
8.6Change for the 12 months
to April 2022	to April 2022		to June 2022

Latin America dairy import volumes¹ increased 6.0%, or 10,086 MT, in April compared to the same

The increase was driven by Forstronger demand for fluid

milk by Cuba and Mexico, higher volumes of cheese by the Dominican Republic but partially offset by decreases of SMP and WMP to Peru.

Imports for the 12 months to April were up 0.9% compared to the same period the year prior, driven by higher volumes of cheese, whey and MPC, and SMP and partially offset by declines in WMP and fluid milk products.

Asia (excluding China) dairy import volumes¹

increased 2.7%, or 11,912 MT, in April compared to the same period the year prior.

The increase was driven by higher demand for SMP by Pakistan and Philippines, higher volumes of cultured products to Philippines and WPC to Singapore.

Imports for the 12 months to April were up 4.1%, or 200,831 MT, compared to the same period the year prior, driven by higher volumes of whey, WPC and SMP, and partially offset by a decrease in lactose, fluid milk products and AMF.

Middle East and Africa dairy import volumes¹

increased 9.5%, or 41,994 MT, in April compared to the same period the year prior.

The increase was driven by higher volumes of SMP to Egypt cheese to Libya and infant formula to Iraq but partially offset by lower volumes of fluid milk products to Togo, Saudi Arabia and Iraq.

Imports for the 12 months to April were up 8.8%, or 422,189 MT, compared to April the year prior, driven by increases in cheese, SMP and fluid milk products.

China dairy import volumes decreased by 22.2%, or 73,010 MT, in June compared to the same period last year. This is the fourth consecutive month of year-on-yeardecline as Covid restrictions continue to impact consumption and demand.

Lower volumes were observed across most product categories and more specifically in WMP, fluid milk products, SMP and cheese mainly from New Zealand.

Imports for the 12 months to June were down 8.6%, or 351,465 MT, driven by whey, fluid milk products, infant formula and SMP and partially offset by increases in WMP.

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

4

OUR MARKETS

Fonterra Milk Collections

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

New Zealand Milk Collections

	•
LITRESDAY	•
M
VOLUME

JUN

JUL

AUG

SEP

OCT

NOV

DEC

JAN

FEB

MAR

APR

MAY

NEW ZEALAND

1.9%

Change for June 2022 compared to June 2021

1.9%

Season-to-date

1 June to 30 June

Fonterra's New Zealand collections for June were 14.9 million kgMS, 1.9% higher than last June.

As is normal for this time of the season, collections for

ForJune represent less than 1% of the full season forecast.

Warm and wet conditions were experienced throughout June. Farms are looking well set up for calving with good pasture covers and animal body condition.

NORTH ISLAND

4.3 %

Change for June 2022 compared to June 2021

4.3%

Season-to-date

1 June to 30 June

North Island milk collections in June were

11.5 million kgMS, 4.3% behind June last season.

Warm and wet conditions earlier in the month helped pasture cover recover from the tough Autumn experienced by most farmers. The middle of June was interrupted with cold weather; however, conditions have set up farms well

for calving.

SOUTH ISLAND

30.0%

Change for June 2022 compared to June 2021

30.0%

Season-to-date

1 June to 30 June

South Island milk collections in June were

3.4 million kgMS, 30.0% higher than last June.

Although a large variance in percentage terms, June collections in the South Island typically represent less than 0.5% of full season collections.

Central and Lower South Island regions had favourable conditions to support milk production with warmer and drier than normal conditions for this time of the season.

AUSTRALIA

10.1%

Change for June 2022 compared to June 2021

0.3%

For the 2021/22 Season compared to the previous season

Fonterra's Australia collections for June were

6.5 million kgMS, a 10.1% increase on June last season.

Third-party volumes increased 0.35 million kgMS and farm collections increased 0.25 million kgMS, respectively.

Fonterra collections across Australia for the full season were 105.5 million kgMS, a 0.3% decline on last season

5