Westland Dairy cuts forecast for 2012 milk prices
BUSINESSDESK: Westland Dairy Products, the dairy co-operative competing with Fonterra, has cut its forecast 2012 milk price, mirroring a global slide in dairy prices and a volatile New Zealand dollar.
The West Coast-based company lowered its milk solid payout by 20 cents a kilogram to a range of $6 to $6.20.
"Fluctuations in payouts are normal and certainly not unique to Westland or this season," chairman Matt O'Regan said.
“The volatility of the New Zealand dollar remains high and the spot [exchange] rate strengthened recently, which results in fewer New Zealand dollars available for payout.”
The kiwi hit a record-high versus the euro and a multi-month high against the greenback this morning after central banks in Europe, England and China eased borrowing costs on concerns about the global outlook.
It recently traded at 64.87 down from 64.99 euro cents at 8am and 80.33 US cents little changed from 80.35 cents.
Mr O'Regan said the company has managed to soften the impacts of the high kiwi through hedging activities that benefitted total payout this season by $5 million.
In May, Fonterra Cooperative Group, the world’s largest exporter of dairy products, cut its forecast 2012 milk price and flagged lower payments in 2013. It lowered the 2011-12 forecast Farmgate Milk Price by 30 cents to $6.05 a kilogram.
On Wednesday, the price of dairy products fell 5.9% in the latest GlobalDairyTrade auction.
The auction came a day after figures showed the ANZ Commodity Price Index, which measures a basket of New Zealand export commodities, fell to the lowest level in more than two years in June.