HOT TOPICS:   Election 2014  |    China   |  Peer-to-peer lending                                        RESOURCES:    Economic calendar   |  Median multiples

The comment stream

Reader poll

About the same.
24% (53 votes)
Better off.
22% (48 votes)
Much worse off.
20% (44 votes)
Much better off.
19% (42 votes)
Worse off.
16% (35 votes)
Total voters: 222

Have rising residential property values left you better or worse off financially?

Older polls

Prices flat in fortnightly globalDairyTrade auction of milk powder; price index up 0.1% but down 10.3% from March 1 peak

Posted in Rural News

Fonterra's payout is set to be a record high this year.

By Bernard Hickey

Prices were broadly flat in the fortnightly internet auction overnight of wholesale milk powder on Fonterra's globalDairyTrade (gDT) platform.

The gDT Trade Weighted Index of prices in US dollars rose 0.1% to 1,272 in the overnight auction from the last auction on April 5. This is down 10.3% from the auction platform's March 1, 2011 record high of 1,418. See full results here at gDT.

The internet auctions began in July 2008, but the gDT TWI calculated before those auctions puts the record high for powder prices at 1,613 in October 2007, which means the prices overnight were 21.1% below their peak. In October 2007 the New Zealand dollar was around 77 USc. It is currently around 79 USc.

On March 23 Fonterra confirmed its forecast for a payout of NZ$7.75-7.80/kg in the current 2010/11 season. See our March 23 article on Fonterra's payout here.

This would beat the previous record high cash payout of NZ$7.66/kg in the 2007/08 season and be up from the NZ$6.37/kg payout last season.

Fonterra said it expected production for the full 2010/11 season would be in line with or slightly ahead of the 1.286 billion kg of milk solids collected in 2009/10 despite an early Summer drought in Northland and the Waikato. This implies a total payout for Fonterra's 10,500 farmers of around NZ$10 billion, up around NZ$1.84 billion from the previous year.

However, Fonterra chairman Henry van der Heyden warned on March 23 that there could be a downward correction in prices and farmers should always be prepared for a drop on global commodity markets, particularly if recent steep rises eat into demand.

Fonterra is forecasting a milk price for the year of NZ$7.50/kg and distributable profits of 40-50 cents a share. However, Fonterra is planning to retain between 15-20 cents a share, leaving a dividend of around 25-30 cents.

Reserve Bank Governor Alan Bollard spoke on April 12 about how a structural shift higher in New Zealand's commodity export prices had improved New Zealand's terms of trade. He appeared relaxed about a rise in the currency to reduce the inflationary effects of such a rise. See our April 12 article here on Bollard's speech.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment in the box on the right or click on the "'Register" link at the bottom of the comments.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current Comment policy is here.