Fonterra keeps forecast farmgate payout at $6/kgMS, sees global dairy prices stable or rising

Thursday 23rd February 2017

Fonterra Cooperative Group has kept its forecast farmgate payout at $6 per kilogram of milk solids, citing the rebalancing of demand and supply which led to a slump in dairy prices last year, and expects those prices to either stay stable of "gradually increase.

The Auckland-based cooperative today affirmed the forecast farmgate milk price announced in November, and combined with projected 50-to-60 cents earnings per share would deliver a total payout to farmers of $6.50 to $6.60 before retentions, it said in a statement. Fonterra also raised its advance rate for February, paid in March, to $4.85/kgMS from a November projection of $4.30/kgMS.

"Since November, the global market for commodity dairy products has remained relatively balanced and we expect global prices to continue to hold or gradually increase over the back half of this season - a view shared by most global analysts," chairman John Wilson said. "Our confidence in the global dairy market at this stage in the season, combined with the strength of our cooperative, has enabled us to increase the monthly advance rates more than we normally would at this time of year."

Dairy prices fell 3.2 percent at the latest GlobalDairyTrade auction this week, with prices for whole milk powder down 3.7 percent to US$3,189 a tonne. AgriHQ trimmed its forecast payout for the 2017 season 5 cents to $6.33/kgMS today due to recent weakness in global dairy markets while acknowledging it's still higher than what the milk processors are forecasting.

BusinessDesk.co.nz

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