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Farmers will lift production: Fonterra

NZ Newswire logoNZ Newswire 21/06/2017 Tina Morrison

Fonterra expects to collect 3 per cent more milk from New Zealand farms this season as higher milk prices encourage farmers to lift production.

The country's dominant milk processor forecast its New Zealand milk collection for the current 2017/18 season would rise to 1575 million kilograms of milk solids, from 1526 million kgMS in the season ended on May 31, it said in its latest Global Dairy Update.

It expects a better season ahead for the dairy industry as the world's largest exporter of dairy products benefits from rising prices.

Last month it set its initial forecast for milk payments to farmers for the 2017/18 season at $6.50/kgMS, up from its expected payout for the 2016/17 season of $6.15/kgMS.

The cooperative on Thursday said that last season's New Zealand milk collection was hampered by wet conditions through spring, however more favourable weather conditions through summer lifted production but cooler conditions in May dented collections in the South Island.

"At this stage, collections are estimated to increase by 3 per cent in 2017/18 assuming a return to more usual climatic conditions," it said in the update.

"The improved milk price environment should provide support to farmers' milk production plans."

The cooperative noted that it was very early in the season to accurately forecast the total milk collection.

China, the largest importer of dairy products, lifted its total dairy imports 10 percent in the 12 months to April. Its fluid and fresh dairy imports increased 13 per cent, whole milk powder lifted 8 per cent and whey powder advanced 12 per cent.

Units in the Fonterra Shareholders Fund last traded at $5.94 on the NZX, and have gained 15 per cent in the past year.

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