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

 


ANZ cuts forecast for Fonterra's 2015 milk payout

ANZ cuts forecast for 2015 milk payout by 11% on falling dairy prices

By Paul McBeth

July 2 (BusinessDesk) - ANZ New Zealand economists lowered their forecast for Fonterra Cooperative Group's 2015 milk payout to farmers, reflecting the continued slide as dairy prices and a kiwi dollar near three-year highs.

Fonterra may cut its 2015 forecast farmgate payout to $6.25 per kilogram of milk solids from the opening $7/kgMS forecast it announced in June, ANZ economists said in note. That would equate to a $3 billion slump in dairy incomes from a record 2014 payout, which is expected to be $8.40/kgMS. The bank expects Fonterra will update its forecasts later this month when it provides the 2015 dividend outlook.

ANZ's downgrade comes after the ninth decline in trade-weighted dairy prices out of the last 10 GlobalDairyTrade auctions, with prices at the lowest level since January last year.

"Continued strength in the NZD, large falls in international dairy commodity prices, and recent price action (which we consider to be bearish) have prompted us to downgrade our 2014/15 milk price forecast," ANZ economists said. "Fonterra seems to have responded to this by reducing the volume on offer over the next four months, but this hasn't been enough to stabilise prices."

The kiwi recently traded at 87.51 US cents, having climbed as high as 87.91 cents overnight.

ANZ economists said dairy prices are lower and the kiwi stronger than what the Reserve Bank had been expecting, though the combination wasn't enough to warrant a change in monetary policy expectations.

"A hike in July still looks odds-on, though we don't consider it the sure-fire bet that the market is currently pricing in," they said. Traders have priced in an 88 percent chance of a rate hike at this month's review, according to the Overnight Index Swap curve.

Separately, the Rabobank Rural Confidence survey released today showed lower optimism among local dairy farmers due to rising interest rates. a strong exchange rate, and falling global milk prices.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Must Sell 20 Petrol Stations: Z Cleared To Buy Caltex Assets

Z Energy is allowed to buy the Caltex and Challenge! petrol station chains but must sell 19 of its retail sites and one truck-stop, the Commerce Commission has ruled in a split decision that acknowledges possible retail price coordination between fuel retailers occurs in some regions. More>>

ALSO:

Huntly: Genesis Extends Life Of Coal-Fuelled Power Station To 2022

Genesis Energy will keep its two coal and gas-fired units at Huntly Power Station operating until 2022, having previously said they'd be closed by 2018, after wringing a high price from other electricity generators who wanted to keep them as back-up. More>>

ALSO:

Dammed If You Do: Ruataniwha Irrigation Scheme Hits Farmer Uptake Targets

Enough Hawke's Bay farmers have signed up for water from the proposed Ruataniwha Water Storage Scheme for it to go ahead as long as a cornerstone institutional capital investor can be found to back it, its regional council promoter announced. More>>

ALSO:

Reserve Bank: OCR Stays At 2.25%

Reserve Bank governor Graeme Wheeler kept the official cash rate at 2.25 percent, in a decision traders had said could go either way, while predicting inflation will pick up as the slump in oil prices washes out of the data and capacity pressures start to build in the economy. More>>

ALSO:

Export Values Down: NZ Posts Biggest Annual Trade Deficit In 7 Years

New Zealand has recorded its biggest annual trade deficit since April 2009, reflecting weaker prices of agricultural commodities such as dairy products, beef and lamb, and increased imports of vehicles and machinery. More>>

ALSO:

Currency Events: NZ's New $5 Note Wins International Banknote Award

New Zealand’s new Brighter Money $5 note has been named Banknote of the Year in a prestigious international competition. The $5 note was awarded the IBNS Banknote of the Year title at the International Bank Note Society’s annual meeting. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news