Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Fonterra lifts forecast for this season’s local milk supply

Fonterra lifts forecast for this season’s local milk supply

By Paul McBeth

March 7 (BusinessDesk) - Fonterra Cooperative Group, the world’s biggest dairy exporter, anticipates bigger growth in milk supply this season with dry conditions not as bad as last year’s drought, and the incentive of a higher forecast farmgate pay-out.

New Zealand milk volumes are forecast to rise 7.5 percent to 1.57 million kilograms of milk solids in the 2013/14 season, up from a previous expectation of 6.4 percent growth, Fonterra said in a statement. Based on the forecast payout to farmers of $8.65 per kgMS, that implies Fonterra will pay some $13.61 billion to source local milk in the season. Fonterra’s New Zealand-sourced milk costs were $8.64 billion in the year ended July 31, 2013, when it paid $5.84 per kgMS to farmers.

The Auckland-based company collected 151 million kgMS in February compared to 137 million kgMS a year earlier when the North Island was in the grip of the worst drought in seven decades. Total collection in the season to date was up 4.9 percent to 1.27 million kgMS.

“While we are seeing dry conditions impact some regions of the country, particularly Waikato and Northland, these are not as widespread as the same time last year,” Fonterra said. “The lift in Forecast Farmgate Milk Price may have a positive influence on milk supply increasing above our previous forecast.”

Fonterra’s board has kept the increase in the forecast payout 70 cents lower than what it would be using calculations from the regulated milk price manual, due to a production mismatch where the price of whole and skim milk powder surged ahead of higher margin products such as cheese and butter.

In December, Fonterra said it was limited by its plant configuration on how much milk powder it can produce, with about 70 percent of production capacity for milk powder and the remainder making cheese and casein.

Last week Fonterra said it would give an update on the business when it reports its first-half result on March 26. It has previously forecast 2014 earnings before interest and tax to fall to between $500 million to $600 million from normalised EBIT of $1 billion in 2013.

Units in the Fonterra Shareholders’ Fund, which gives investors exposure to the company’s dividend stream, gained 0.8 percent to $5.98, and have increased 2.2 percent this year.

(BusinessDesk)


© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Auckland Port Study: Port To Ship Out – No Departure Date

Interest groups in Auckland and its waterfront chose a group of representatives to determine the future of the port. Their consensus is that the Port is going to have to move but not before a credible location is confirmed... More>>

ALSO:

Tax: GST Threshold For Online Purchases Won't Lower Before 2018

The government wants to lower the threshold on online purchases which qualify for GST from mid-2018, but says more work is needed and there will be no change without public consultation. More>>

ALSO:

North Canterbury: Government Extends Drought Classification

The government has extended a drought classification for the eastern South Island until the end of the year, meaning the area will have officially been in drought for almost two years, the longest period for such a category. More>>

ALSO:

Negotiations Fail: Christchurch Convention Centre Build To Proceed Without PCNZ

After protracted negotiations, the government has ditched the construction consortium it picked to build Christchurch's replacement convention centre, which it now anticipates delivering at least two years behind the original schedule. More>>

ALSO:

Other Centres' Convention Centres:

Ruataniwha: Greenpeace Launches Legal Challenge Against $1b Dam Plan

Greenpeace NZ is launching a legal challenge against a controversial plan to build a dam that’s set to cost close to $1 billion and will pollute a region’s rivers. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news