Kiwi dairy giant Fonterra has revised its forecast payout for the 2015/16 season at NZ$5 per kg MS in response to falling production and levelling markets.
Fonterra’s overall prices is based on a farmgate price of $4.60, 75 cents higher, and a forecast earnings per share of 40-50 cents.
In total, this amounts to $5-5.10 kgMS.
Improvements reflect a lift in global Whole and Skimmed Milk Powder since July, which have increased 44 and 21 per cent respectively.
This is according to Fonterra Chairman John Wilson, who said that management changes at farm level in response to lower prices have decreased production.
He added: “Current global prices are unsustainable. While there are signs that supply growth globally is easing, a lift in demand, which is needed for prices to continue to rise, is still to come.
“We are 5 per cent behind last season to date and are currently tracking 8 per cent down on last season on a weekly basis.”
Fonterra now expects is now forecasting production to be down more than five per cent for the coming season.
Source: The Dairy Site
