Fonterra Maintains Current 2014-15 Forecast for Farmgate Milk Price

February 25, 2015 01:58 PM
Fonterra Maintains Current 2014-15 Forecast for Farmgate Milk Price

New Zealand dairy giant cites continued volatility in international commodity prices.

Source: Fonterra

Dairy Today’s note: Based in New Zealand, dairy cooperative Fonterra controls 45% of the world’s dairy trade.  Last month, it  announced that it expects a 3% drop in milk production for this season. 

Fonterra Co-operative Group Limited today maintained its current forecast Farmgate Milk Price for the 2014/15 season at $4.70 per kgMS. Along with the previously announced estimated dividend range, this amounts to a forecast Cash Payout of $4.95–$5.05 for the current season.

Chairman John Wilson said that although dairy commodity prices had gone up, the increase was not sufficient to raise the forecast Farmgate Milk Price at this time.

“Since December, GDT prices for Whole Milk Powder have increased 45 per cent and Skim Milk Powder prices have increased 13 per cent,” Wilson said. “There continues to be significant volatility in international commodity prices. New Zealand volumes are down, with continued uncertainty in milk production due to climatic conditions in New Zealand with droughts in Canterbury, Marlborough, Central Otago and North Otago.

“Today’s forecast reflects the Board and management’s best estimates at this time,” he added. “We are advising farmers to continue to be cautious with budgeting and we will update them as the season progresses.”

Chief Executive Theo Spierings said Fonterra was sticking to its strategy, with confidence in the long-term fundamentals of dairy demand.

“We will provide a full business update when we report our Interim Result on 25 March,” Spierings said.

Fonterra is required to consider its forecast Farmgate Milk Price every quarter as a condition of the Dairy Industry Restructuring Act (DIRA). 

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