Fonterra raises milk price payout forecast by 50c
Farmers can now expect $5.25 to $5.35 before retentions, including dividends. With special feature audio.
Fonterra [NZX: FSF] has lifted its farmgate milk price forecast for 2016/17 by 50c to $4.75 per kg of milk solids.
Chairman John Wilson says global milk prices remain at unrealistically low levels but have started to improve as global demand and supply continue to rebalance.
When combined with the forecast earnings per share range for the 2017 financial year of 50 to 60 cents, the total payout available to farmers this season is forecast to be $5.25 to $5.35 before retentions, Fonterra says.
The increase follows consecutive strong GlobalDairyTrade (GDT) auctions although the increasing NZD/USD exchange rate continues to offset some of these gains in milk prices.
Average dairy prices were up 12.7%, with whole milk powder (WMP) jumping an impressive 18.9% at last week’s auction. This followed a 6.6% increase at the previous auction earlier this month.
“Milk production is reducing in most dairying regions globally in response to low milk prices and this is bringing the world’s milk supply and demand back into balance. Milk production in the EU is now in decline and our New Zealand milk collection at this early stage is around 4% lower for the year to date,” Mr Wilson says.
“We expect the dairy market to be volatile over the coming months and will continue to keep our forecast updated for our farmers as we move into the season."
Meanwhile, NZX milk futures contracts have reached a new milestone, with more than 10 million kilograms of milk solids (kgMS) traded since the product launched less than three months ago.
The 2016/17 season contract traded at a new high of $5.11 on Wednesday, up from $4.35 when the contract launched in May.
The 2016/17 contract last traded at an average price of $5.10, while the 2017/18 average contract price was $5.60.
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Staff Reporter
Thu, 25 Aug 2016
Thu, 25 Aug 2016
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Fonterra raises milk price payout forecast by 50c
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