Fonterra Milk Price Forecast Falls Short of Expectations
Auckland-based Fonterra Thursday forecast a farmgate milk price of NZ$4.25 ($2.87) a kilogram of milksolids for the season ending May 31, 2017, and maintained its estimate for the current season at NZ$3.90 a kilogram, a nine-year low. ASB Bank economists had predicted an opening Fonterra forecast for 2016-17 of NZ$4.80, while Bank of New Zealand expected NZ$4.60.
A global milk glut is depressing dairy incomes and curbing economic growth in New Zealand, bolstering the case for another interest-rate cut from the central bank. Governor Graeme Wheeler has already cut the benchmark rate to a record-low 2.25 percent and said another reduction is likely, though a booming housing market and strength in other parts of the economy, such as tourism, may stay his hand at the next decision June 9.
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