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


Fonterra says price gap between dairy products easing

Fonterra says price gap between milk powder vs casein and cheese is easing

May 12 (BusinessDesk) - Fonterra Cooperative Group, which posted a 53 percent drop in first-half profit as gains in prices of milk powder ran ahead of products such as casein and cheese, says the gap is becoming less pronounced – a sign that pressure on margins may ease.

Prices of reference commodity prices used to calculate the farmgate milk price– whole and skim milk powder, butter milk powder, butter and anhydrous milk fat – rose 44 percent to $5,981 a tonne in the third quarter while non-reference product prices, cheese and casein, rose 22 percent to $7,499 a tonne.

That’s a smaller gap than in the first quarter, when prices gained 62 percent and 22 percent respectively, the Auckland-based company said in its latest global dairy update.

Last November, Fonterra took a $157 million provision against inventory of specialised ingredients and branded consumer products produced by its NZ Milk Products division because rising input costs squeezed margins. In March this year, it posted a slump in first-half earnings as gross margin shrank to 12.5 percent from 18.6 percent.

The company has said it can’t process more milk into higher returning milk powder products until it builds more driers because of the mix of its factories, which can produce milk powder versus cheese and casein at a ratio of 75 percent to 25 percent.

The volume of sales of reference commodity prices shipped fell 2 percent in the third quarter as Fonterra took advantage of higher prices to ship more volume earlier in the year, while some was contracted for shipment in the fourth quarter. The volume of non-reference products shipped fell 13 percent.

Total production volume rose 21 percent in the third quarter, reflecting the impact of drought in the same quarter of 2013.

Milk collection across New Zealand for the 11 months ended April 30 rose 8 percent to 1,524 million kilograms of milk solids.

Units of the Fonterra Shareholders’ Fund were unchanged at $6.0.


© Scoop Media

Business Headlines | Sci-Tech Headlines


DIY: Kiwi Ingenuity And Masking Tape Saves Chick

Kiwi ingenuity and masking tape has saved a Kiwi chick after its egg was badly damaged endangering the chick's life. The egg was delivered to Kiwi Encounter at Rainbow Springs in Rotorua 14 days ago by a DOC worker with a large hole in its shell and against all odds has just successfully hatched. More>>


Trade: Key To Lead Mission To India; ASEAN FTA Review Announced

Prime Minister John Key will lead a trade delegation to India next week, saying the pursuit of a free trade agreement with the protectionist giant is "the primary reason we're going" but playing down the likelihood of early progress. More>>



MYOB: Digital Signatures Go Live

From today, Inland Revenue will begin accepting “digital signatures”, saving businesses and their accountants a huge amount of administration time and further reducing the need for pen and paper in the workplace. More>>

Oil Searches: Norway's Statoil Quits Reinga Basin

Statoil, the Norwegian state-owned oil company, has given up oil and gas exploration in Northland's Reinga Basin, saying the probably of a find was 'too low'. More>>


Modern Living: Auckland Development Blowouts Reminiscent Of Run Up To GFC

The collapse of property developments in Auckland is "almost groundhog day" to the run-up of the global financial crisis in 2007/2008 as banks refuse to fund projects due to blowouts in construction and labour costs, says John Kensington, the author of KPMG's Financial Institutions Performance Survey. More>>


Health: New Zealand's First ‘No Sugary Drinks’ Logo Unveiled

New Zealand’s first “no sugary drinks logo” has been unveiled at an event in Wellington... It will empower communities around New Zealand to lift their health and wellbeing and send a clear message about the damage caused by too much sugar in our diets. More>>


Get More From Scoop

Search Scoop  
Powered by Vodafone
NZ independent news