August 4, 2016

Fonterra Maintains Milk Price Forecast

 |  By: Bloomberg News

Fonterra Cooperative Group Ltd., the world’s biggest dairy exporter, maintained its forecast milk payout for the current season even as a strong New Zealand dollar hurts its global competitiveness.

Auckland-based Fonterra on Monday kept its estimated farmgate milk price at NZ$4.25 ($3.06) a kilogram of milksolids for the season ending May 31, 2017 -- a small improvement on last year’s NZ$3.90 a kilogram, which was a nine-year low. The company predicted earnings per share of 50-60 NZ cents, taking the total payout available to farmers to between NZ$4.75 and NZ$4.85 a kilogram.

The central bank estimates some 80 percent of New Zealand’s dairy farmers are operating at a loss as a global milk glut depresses dairy incomes for a third straight year. Governor Graeme Wheeler has already cut the benchmark interest rate to a record-low 2.25 percent and said another reduction is likely, even though a booming housing market is threatening financial stability.