Fonterra forecasts higher milk price

25-May-2016 - Last updated on 26-May-2016 at 10:50 GMT

Fonterra says that it predicts the price of milk is going to increase.

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New Zealand dairy cooperative Fonterra has announced an opening forecast Farmgate Milk Price of NZ$4.25 ($2.86) per kgMS for the 2016/17 season, an increase of NZ$0.35 ($0.24) on the forecast for the current season.

Chairman John Wilson said the forecast took into account factors including the high NZD/USD exchange rate, supply volumes from other regions, current global inventory levels, and the economic outlook of major dairy importers.

“We are expecting global dairy pricing to gradually improve over the season as farmers globally reduce production in response to ongoing low milk prices, however we continue to urge caution with on-farm budgets,” Wilson said.

“We will announce our forecast earnings per share for the 2017 financial year in July as normal.”

No change to current price

Chief executive Theo Spierings said the long term fundamentals for global dairy remain positive with demand expected to increase by two to three per cent a year due to the growing world population, increasing middle classes in Asia, urbanization and favorable demographics.

Fonterra is required under the Dairy Industry Restructuring Act to announce its forecast Milk Price at the beginning of each season, which starts June 1.

There is no change to the current 2015/16 season forecast Farmgate Milk Price, which is being held at $3.90 per kgMS.