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Westland Milk predicts lower payout

Low international milk prices and high kiwi dollar cause downgrade.

Chris Hutching
Wed, 29 Apr 2015

Westland Milk Products has revised its forecast 2014-15 season payout down to $4.90-$5.10 per kilo of milk solids from the previous prediction of $5-$5.40 per kgMS.

The reason for the downgrade is the latest international milk auctions.

“Skim milk powder out of Europe is being offered at $ US2100-$US2200 per metric tonne which, for larger global buyers, is very attractive and well below offers from New Zealand of $US2600-$US2800/MT and the dairy auction itself, which has seen prices of $US2300-$US2400/MT,” chief executive Rod Quin says.

The high value of the New Zealand dollar is a contributor to the lower forecast.

The New Zealand dollar remains strong at between 76c and 77c against the US dollar.

Mr Quin says Westland is well placed due to sales decisions made earlier in the season, but the co-operative will still have some exposure to the market place and the impact of lower prices for the remainder of the season.

“I expect the next three months to be very tough, with European processors aggressively selling their peak milk,” he says. “Not all European markets are producing more milk than last year, but enough are to drive an oversupplied situation.”

He claims current prices are "unsustainable in terms of farm economics" and this could help turn the market around through a reduction in production.

He predicts that milk supply in Europe and the United States will slow, as it has in New Zealand.

“Westland’s milk flows are now tracking down and we do not expect them to recover, given the lower pay-out forecast for this season.”

Chris Hutching
Wed, 29 Apr 2015
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Westland Milk predicts lower payout
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