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Westland Milk follows Fonterra is raising payout forecast on upbeat outlook

Thursday 30th May 2013

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Westland Milk Products, the Hokitika-based dairy cooperative, has raised its payout forecast for the 2014 season on expectations prices will be underpinned by strong demand and a global shortage of milk.

Westland forecast a 2014 payment to farmers of $6.60 to $7 per kilogram of milk solids, up between 60 cents and 70 cents from what it expects to pay this season of $6 to $6.30 per kgMS.

"The market is showing signs of supply constraints and higher than average prices are expected throughout next season," chief executive Rod Quin said in a statement. "With the market particularly volatile as a result of the drought, we expect prices to be higher at the start of the season and remain relatively high throughout."

Fonterra Cooperative Group, the world's biggest dairy exporter, yesterday said it expects to pay $1.20 more to farmers per kgMS for the 2014 season as a result of strong international prices for dairy products. The farmer-owned cooperative will pay $7 per kgMS next season, up from $5.80 in the current season, it said in a statement today.

Prices of dairy products reached a record high in April on Fonterra's GlobalDairyTrade platform and have edged lower in the two auctions since then. While dairy commodity prices may have peaked, they're expected to stay "at or near current levels until the fourth quarter of 2013," Fonterra chairman John Wilson said yesterday.

Westland is encouraging farmers to continue to supply milk during the offseason months, saying it is doing more preventative maintenance, making some of the plant available year round.

BusinessDesk.co.nz

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