Fonterra is to make an unscheduled announcement on Friday November 21 about its milk solids payout. It is highly likely that they are set to announce a decrease of at least 30 cents per kilogram.
The policy of the Fonterra board is to announce if its payout forecast changes by plus or minus 30 cents, a Fonterra spokesman said. Forecast announcements are usually made at board meetings every six weeks.
ANZ rural economist Kevin Wilson said that he very much expects Fonterra to announce a fall in its payout forecast. Fonterra had forecast a NZ$6.60 per kilogram of milk solids payout at the end of the milk season in July 2009. A 30 cent fall would take the payout down to at least NZ$6.30 per kilogram.
ANZ's current forecast for the payout is around NZ$6.00.
However, Wilson said that although the signs are not good, it does not signal "the end of the earth," with a payout of NZ$6 still good historically.
"Last year's payout was extraordinarily high, so NZ$6 per kilogram is still good historically."
"There's still eight to nine months left in the season," Wilson said. "Although the short term trend is not looking good, there's still a lot of milk to 'go under the bridge', as it were, before the end of the season on July 31, 2009."
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