Sharechat Logo

Westland Milk cuts 2015 milk payout forecast, citing oversupply, high kiwi

Wednesday 26th November 2014

Text too small?

Westland Milk Products, the Hokitika based dairy cooperative, has cut its forecast milk payout for the second time in four months, saying a global over supply of dairy products and a relatively high kiwi dollar had crimped cash flows.

Westland cut its forecast for the 2014/2015 season by 40 cents to a range of $5 to $5.40 per kilogram of milk solids, from a previous range of $5.40 and $5.80/kgMS. The move keeps Westland on pace with Fonterra Cooperative Group, which lowered its forecast to $5.30/kgMS from $6/kgMS in September. The continued slide in dairy product prices has analysts speculating Fonterra may further revise the forecast.

“This will be unwelcome news for shareholders, but not unexpected,” chairman Matt O’Regan said in a statement ahead of the annual shareholders' meeting. In October, "we warned suppliers that the high level of in-market stocks held by dairy customers was producing downward pressure on prices, especially in the area of bulk milk powders where the majority of our business is still conducted."

Skim milk powder, which makes up "a substantial proportion" of Westland's production, fell 12 percent in the latest GlobalDairyTrade auction. The GDT average winning price slid 3.1 percent to US$2,561 at the latest auction, the lowest level since August 2009, prompting economists at ASB to cut their milk price forecast to $4.70/kgMS.

The kiwi dollar recently traded at 78.12 US cents, and has dropped about 12 percent from a peak in early July.


  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

MARKET CLOSE: Blue-chip stocks Meridian, A2 lead market lower
NZ dollar rises on Brexit hopes, rate cut reassessment
Three not failing, just needs a new owner - MediaWorks CEO
Major investors back new CBL class action targeting directors
Rip Curl purchase a done deal on Kathmandu proxies alone
Comvita chair Neil Craig eyes the exit once he finds a new CEO
Mercury raises guidance on increased storage, high spot prices
Eroad reports strong 3Q sales growth, eyes ASX listing
MediaWorks puts TV business on the block
NZ dollar benefits as preliminary Brexit deal improves risk appetite

IRG See IRG research reports