Fonterra boosts forecast milk price

By Jim Cornall contact

- Last updated on GMT

Fonterra has increased its farmgate milk price forecast by 50 cents.
Fonterra has increased its farmgate milk price forecast by 50 cents.

Related tags: Milk, Fonterra

Fonterra Co-operative Group Limited has today announced an increase to its 2016-17 forecast Farmgate Milk Price.

The hike sees NZ$0.50 ($0.365) added to the price, which now sits at NZ$4.75 ($3.47) per kgMS. 

When combined with the forecast earnings per share range for the 2017 financial year of NZ$0.50-0.60 ($0.365-$0.439), the total payout available to farmers is forecast to be NZ$5.25-5.35 ($3.84-3.91) before retentions.

Fonterra chairman John Wilson said that while global milk prices remain low, prices have started to improve as global supply and demand start to rebalance.

Although prices have increased on GlobalDairyTrade, Wilson acknowledged that the increasing NZD/USD exchange rate offsets some of the gains.

He noted that because of the low milk prices production in most regions is falling. He said that Fonterra’s New Zealand milk collection is around 4% lower for the year to date.

Additional share dividend

Just a week ago, Fonterra confirmed it would pay​ a further NZ$0.10 ($0.07) per share of its previously announced 2015/16 forecast dividend of NZ$0.40 ($0.29) per share to deliver as much cash as quickly as possible to its farmers.

Fonterra is required to forecast its Farmgate Milk Price quarterly under the Dairy Industry Restructuring Act (DIRA).

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