Fonterra sees smaller decline in 2017 milk production

New Zealand collections fell 1.4 percent to 172.5 million kilograms of milk solids in January from the same month a year earlier

Fonterra sees a smaller decline in local milk production after better-than-expected collections followed unfavourable weather during peak milking months.

New Zealand collections fell 1.4 percent to 172.5 million kilograms of milk solids in January from the same month a year earlier, taking the season-to-date total to 1.05 billion kgMS, down 5 percent from the 2016 season, the Auckland-based cooperative said in its latest Global Dairy update to the NZX. North Island collections were down 6.8 percent in the eight months to Jan. 31, and South Island collections were 1.6 percent lower.

Fonterra had been picking the 2017 season collection to fall 7 percent after a very wet spring hurt North Island milking operations, but is now forecasting now forecasting a 5 percent decline as "collections have shown signs of improvement" since then.

The world's biggest dairy exporter has sold 357,704 tonnes of product through the GlobalDairyTrade auctions in the year to date, 11 percent lower than a year earlier. However, the weighted average product price of US$3,180 per tonne is 34 percent higher than the 2016 year.

Dairy prices eked out an unexpected gain in the latest GDT event as commodity products recovered from their slump last year. However, the Reserve Bank of New Zealand anticipates prices will slip back to about US$3,000 a tonne.

Units in the Fonterra Shareholders' Fund, which gives investors exposure to the cooperative's earnings stream, increased 0.3 percent to $6.22

(BusinessDesk)