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Fonterra lifts forecast milk payout again

NZ Newswire logoNZ Newswire 20/09/2016

© Getty Images Fonterra is lifting its forecast milk payout to farmers again - adding another 50 cents to its payout.

The hike means it has lifted its predicted payout by $1 per kilogram of milksolids in less than a month - a 23.5 per cent increase

The dairy giant says its forecast farmgate milk price for the current 2016/17 season will now be $5.25/kgMS.

Chairman John Wilson says that since its last review in August global milk supply has continued to reduce and demand has remained stable.

"Milk production in key dairying regions globally is reducing in response to low milk prices," he said.

European milk production for 2016 was beginning to flatten out and milk collection in New Zealand was currently more than 3 per cent lower than last season, he said.

"While we have seen some improvement in GDT auction prices recently, the high NZD/USD exchange rate is offsetting some of these gains.

"There is still volatility in global dairy markets and we will continue to keep our forecast updated for our farmers over the coming months," Mr Wilson said.

Earlier on Wednesday, dairy prices at Fonterra's GlobalDairy Trade auction rose by 1.7 per cent, its fourth successive gain, despite whole milk powder prices falling 0.2 per cent.

They are now at their highest levels for 18 months.

Fonterra hiked its forecast payout last late month from $4.25/kgMS to $4.75/kgMS.

It is scheduled to report annual earnings on Thursday with last season's low farmgate payout set to help the milk processor's profitability.

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