Murray Goulburn’s ASX-listed unit trusts took a hit after the cooperative announced a forecast 8% fall in its annual milk intake for 2018.
A short time ago, they were down 4.7% to $0.70.
In a market update, the cooperative says its total 2018 milk intake is now expected to be 2.3 billion litres.
However, Australia’s largest milk processor says reduction in milk intake hasn’t impacted the opening average available Southern Milk Region farmgate milk price (FMP1) of $5.20/kilogram.
The farmgate milk price is a weighted average paid to dairy farmers in Victoria, South Australia and southern New South Wales.
“The impact of the reduction in milk intake has been offset by various cost and business improvements compared to budget,” says Murray Goulburn.
Foreign exchange fluctuations, including the strengthening of the Australian dollar against the US dollar, could drag down the farmgate milk price.
“If the recent strengthening of the Australian dollar was to continue over the full financial year, this could create some uncertainty in relation to the achievability of $5.50/kg,” says Murray Goulburn.
Murray Goulburn is reviewing its business after ongoing price volatility in global dairy markets.
Last month Murray Goulburn announced the closure of 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 coop has also suspended dividends and is reviewing its dividend payout ratio.
In February, the business posted a loss of $31.9 million for the half year to December, with revenue down 14.8% to $1.176 billion.