"It is a consequence of the high levels of instability in both trading and financial markets and the need for Fonterra to strengthen further our balance sheet in such uncertain conditions. The balance sheet is not under pressure, but we need to ensure it remains that way given the impact of current market conditions on our cost of capital," Fonterra chairman Henry van der Heyden said. Meanwhile Fonterra also cut its forecast payout for the current 2008/09 year to NZ$6.60 a kilogram from its May forecast of NZ$7.00 a kilo "Since then (May) we have seen prices fall away from last year's record highs," said van der Heyden. "High prices have dampened global consumer demand and, at the same time, have encouraged production increases in exporting regions around the world. With buyers playing a waiting game, there is the possibility of further softening of prices before supply and demand come back into balance," he said. Fonterra has NZ$35 million of NZDX listed capital notes on issue. It owed NZ$3.58 billion in non-current borrowings and NZ$2.4 billion of current borrowings as at November 30, including NZ$2.06 billion of commercial paper issued in the previous six months.