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Fonterra lifts forecast milk price 30c

Friday 10th December 2010

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Fonterra has increased its forecast milk price for the 2010/11 season by 30c to $6.90.

The forecast distributable profit range for the 2011 financial year was unchanged at 40-50c per share, as was the target dividend range of 25-35cps, the company said today.

The estimated fair value share price for the next season in 2011/12 was $4.52, the same as the current season's price.

Fonterra chairman Sir Henry van der Heyden said the decision to raise the forecast milk price reflected the continuation of high international dairy prices further into the 2010/11 season.

But farmers were potentially facing much higher input costs if dry weather continued.

"It is still early in the season, and some good falls of rain could help a lot, but milk production in the North Island is declining and we know farmers in some regions are struggling," Sir Henry said.

Chief executive Andrew Ferrier said global markets for key dairy ingredients remained finely balanced, with solid demand being underpinned by some growth in supply out of the northern hemisphere.

Fonterra was reviewing the potential impact of the recent dry conditions on anticipated production levels.



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