Dairy payout on track for $5.90-$6.00; despite dry weather, output will be up 1%

Dairy payout on track for $5.90-$6.00; despite dry weather, output will be up 1%

Fonterra has confirmed its payout forecast range for the 2012/13 season of NZ$5.90 - $6.00 before retentions for a fully shared up farmer, unchanged from the  previous forecast range.

Chief executive Theo Spierings said dry weather conditions, particularly in the North Island, in mid-December and January had resulted in a slowdown in milk supply growth. 

“We had a strong start to the season and milk collection volumes were running 6% ahead of last season on a year-to-date basis,” he said.  “However, the dry conditions mean we are currently forecasting total milk collection volumes to finish approximately 1% ahead for the full season.” 

Global dairy prices remained relatively flat through December and January, with the GDT-TWI increasing by 2% over this period.

The index has since gained 5% in February.

Given current global conditions, our Farmgate Milk Price forecast anticipates global dairy prices are likely to move higher in the second half of the season. 

The current Farmgate Milk Price forecast of $5.50 kgMS is based on no substantial change to the current exchange rate for the rest of the season. If there was a further significant strengthening of the New Zealand dollar against the USD then this may adversely impact on the forecast Farmgate Milk Price.

Fonterra’s forecast Earnings Per Share range remains at 40-50 cents.

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Same as mine, my forecast on milk price (payout = price + share dividend - retention) is around $5.60 per kg of milksolids.
 
High NZD is the head wind blowing the milk price down.