May 30, 2014
Fonterra forecasts milk price of NZ$7 per kgMS
Fonterra Co-operative Group Limited has made an opening forecast farmgate milk price of NZ$7.00 per kilogramme milk solids (kgMS) for the 2014/15 season.
This matches the opening forecast provided a year ago at the start of the 2013/14 season.
The forecast cash payout -- which comprises the forecast farmgate milk price and dividend for the 2014/15 season -- will be announced in July when Fonterra's budget is completed and approved.
The co-operative is forecasting milk supply for the new season of 1,616 million kgMS - up 2% on the current season forecast of 1,584 million kgMS.
Chairman John Wilson said the new season farmgate milk price forecast remained historically high, but also reflecting current market conditions.
"Our farmers understand the realities of dairy commodity price cycles, and will exercise caution at this early stage in the season," he said.
Chief executive Theo Spierings said the shift in supply and demand over the past few months showed that volatility continued to exert a strong influence over the global outlook for dairy.
"Dairy commodity prices have come off the peak reached in early February this year, as global supply and demand have rebalanced. There is currently more milk available for the international market to absorb. We expect demand from China to remain strong. In Russia, there will be pressure on the balance between imports and local production. These factors are expected to continue influencing the supply-demand balance," said Spierings.
The co-operative has also confirmed that it is reducing its current forecast farmgate milk price for the 2013/14 season to NZ$8.40 per kgMS. Along with a reconfirmed forecast dividend of 10 cents per share, the change amounts to a forecast cash payout of NZ$8.50 for a fully shared-up farmer.
