Fonterra Raises Farmgate Milk Price Forecast

25 Aug 2016 –-- Fonterra has raised its farmgate milk price forecast for 2016/17 to $4.75 per kg of milksolids, an increase from a previous forecast of $4.25/kg.

Combined with the forecast earnings per share range for the 2017 financial year of 50 to 60 cents, the total payout available to farmers in the current season is forecast to be $5.25 to $5.35 before retentions, Fonterra said.

Dairy farmers have welcomed the improved prices amid a sector which has faced financial losses for the past two seasons.

Fonterra chairman John Wilson said current global milk prices remain at unrealistically low levels, but had started to pick up on the back of improved global demand.

He said: “Milk production is reducing in most dairying regions globally in response to low milk prices and this is bringing the world’s milk supply and demand back into balance. Milk production in the EU is now in decline and our New Zealand milk collection at this early stage is around 4 per cent lower for the year to date.”
 
“Prices have increased on GlobalDairyTrade but the increasing NZD/USD exchange rate continues to offset some of these gains. We expect the dairy market to be volatile over the coming months and will continue to keep our forecast updated for our farmers as we move into the season.”