The slump in global prices for dairy appears to have eased.
The Fonterra Co-operative Group, the world’s biggest dairy exporter, today increased its forecast Farmgate Milk Price by 15 NZ cents to $NZ6.15 per kgMS.
Chairman John Wilson says the rise is “good news for our farmers and their communities” and reflects the strong fundamentals supporting global dairy markets.
“World dairy prices have risen in recent months and as we near the end of the season we have more visibility and certainty which makes us confident of our $6.15 position,” says Wilson.
Fonterra also confirmed its forecast earnings per share range of 45 to 55 NZ cents for the 2017 financial year, as it continues to target a full year dividend of 40 NZ cents.
“The increase in the forecast milk price for the current season and the improved forecast for
2017/18 will be welcome news for our farmers following two challenging seasons on farm,” says
Higher milk prices pushed Fonterra’s revenue up 8% to $13.9 billion for the first nine months.
Analysts at Rabobank say prices are expected to stay higher.
“The expectation is for global dairy prices to trade at or near these levels through much of 2017-18,” according to Rabobank’s May agribusiness monthly.
However, the global dairy glut of last year is still having an impact on the industry.
Murray Goulburn this month announced it was closing dairy processing centres at Edith Creek, Tasmania, and Rochester and Kiewa in Victoria with the loss of more than 300 jobs.
The company also announced write-downs of $410 million.
The moves by Australia’s biggest dairy processor are to lower its costs following a business review prompted by reduced milk intake across the network.
The business is facing legal action by the ACCC (Australian Competition and Consumer Commission) over broken promises it made dairy farmers about what they would be paid for their milk.
The allegations relate to representations made by Murray Goulburn to its Southern Milk Region dairy farmers between June 2015 and April 2016 about the average farmgate milk price it expected to pay them during the financial year.