Fonterra has boosted its milk payout forecast for next season to between $6.90 and $7.10 a kilogram of milksolids.This represents a forecast milk price of $6.60/kgMS, which is 50c above the forecast for the current season and represents $50,000 more incom
Fonterra has boosted its milk payout forecast for next season to between $6.90 and $7.10 a kilogram of milksolids.
This represents a forecast milk price of $6.60/kgMS, which is 50c above the forecast for the current season and represents $50,000 more income for a farmer producing 100,000kg of milksolids and about $600 million to New Zealand’s economy.
Fonterra had earlier indicated next year’s payout would be able the same as the current season at $6.10/kgMS.
The dairy giant has also forecast a distributable profit of 30-50c a kilogram of milksolids.
Fonterra chairman Sir Henry van der Heyden said if international dairy prices and foreign exchange rates were held at current levels for most of the current year, it was possible the 2010/11 payout could be more than $8/kgMS.
He said the forecast represented a more cautious outlook given the high degree of volatility in the market.
“That’s what the market looks like right now, but we know that there is a substantial volatility in the market,” Sir Henry said.
“The reality is that we are seeing big swings in foreign currencies and turmoil in some economies. These factors could have a big impact on demand for dairy produces and the prices we ultimately realise.”
Fonterra chief executive Andrew Ferrier said the opening forecast was based on a favourable outlook for dairy pricing.
“There continues to be strong growth in dairy consumption and demand from China, the rest of Asia, the Middle East and North Africa,” he said.
“Meanwhile, global supply remains constrained, with production down because of adverse weather in Europe and Australia.”
Fonterra remained on track this season for a payout of $6.50-$6.60/kgMS, before retention. Farmers are expected to receive $6.30 to $6.40/kgMS for each share they hold backed by milk production and a dividend of 20-30c for each “dry” share held.
