Fonterra ‘comfortable’ with $4.55 payment forecast
July 20th, 2009
Fonterra chairman Henry van der Heyden says he is “still comfortable” with its forecast milk fat payment of $4.55 a kg for 2010, even though the kiwi dollar is trading above its assumed 59-60 US cents level. Speculation has swirled the forecast is too optimistic as farmers worldwide reel from prices which in some instances have sunk below production costs. There “may be a little bit of downside because of the currency. But we’ve still got 12 months to run.”
Farmers in Europe are currently getting 20-25 euro cents a litre, the region’s lowest milk prices for 30 years. Aust farmers also are smarting. National Foods has cut its average milk price by 32% to A34c a litre from A50c last year, leaving farmers across the Tasman barely able to meet their costs. Fonterra views global dairy prices as “bouncing along the bottom” rather than finding a base. Prices will come under further pressure as stockpiles build in Europe, where the EC is extending its intervention purchases through until February 2010 from the original expiry of August 31. Stockpiles of butter and milk powder in Europe are already standing at 80,000 tonnes and 206,000 tonnes, respectively, almost twice the typical levels.
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