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

 


Westland Milk follows Fonterra in slashing payout forecast

Westland Milk follows Fonterra in slashing payout forecast

By Jonathan Underhill

July 30 (BusinessDesk) - Westland Milk Products, the Hokitika-based dairy cooperative, has followed Fonterra Cooperative Group in cutting its forecast payout for the 2015 season, citing weaker global dairy prices and high New Zealand dollar.

Westland, the nation's second-largest dairy cooperative after Fonterra, is forecasting a payout of $6 to $6.40 a kilogram of milk solids before retentions, it said in a statement. That's down from $7.50 to $7.70 per kgMS it expects to pay for the 2014 season.

"The market has continued to decline as customers limit their purchases due to higher inventories in their supply chains, and growth in milk and dairy product supply from Europe and the US," chief executive Rod Quin said.

The New Zealand dollar fell below 85 US cents for the first time in seven weeks after Fonterra cut its 2015 farmgate milk payout forecast to $6/kgMS yesterday. It fell as low as 84.90 cents, the lowest since early June. Still, Westland's Quin said the currency hasn't fallen enough to make up for the decline in dairy prices.

"To date, the decline in the dollar has been very small and the currency remains overvalued," he said.

Westland is lifting production of higher-margin products such as infant formula to reduce its reliance on bulk dairy commodities so that it is less vulnerable to swings in the commodity cycle, he said.

Prices of dairy products reached the lowest level since December 2012 in the latest GlobalDairyTrade auction. Elevated dairy prices propelled New Zealand's terms of trade to a 40-year high in the first quarter of this year, providing a major impetus to the nation's growth, though economists say trade has probably peaked given the subsequent decline in prices of milk powder exports.

Exports of milk powder, butter and cheese make up 31 percent of New Zealand's total overseas shipments, based on government figures for the 12 months ended May 31, and surged 36 percent in that year. Dairy exports are almost three times more valuable than meat, the next-biggest commodity New Zealand sells to the world.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Court Ruling: Kiwifruit NZ Ordered To Consider Collaborative Marketing Proposals

The High Court has told kiwifruit marketer Zespri to reconsider collaborative marketing proposals from Splice Fruit and Seeka Kiwifruit to sell fruit offshore that its board had previously rejected. More>>

ALSO:

Electric Vehicles: No Road User Charges Feature In Govt Package

Drivers of electric vehicles won't have to pay road user charges and will be allowed to drive in bus lanes as part of a new government plan to double EV numbers annually to a target 64,000 by 2021. More>>

ALSO:

Pre-Budget: Computer Emergency Response Team, Assemble!

John Key told the country's first ever Cyber Security Summit in Auckland that the government had earmarked funding set up a national Computer Emergency Response Team to help prevent and act on cyber incidents in partnership with the private sector and other organisations. More>>

ALSO:

Job Cutter Goes: Mark Weldon To Step Down As MediaWorks CEO

“When I joined MediaWorks in August 2014, I had a mandate to lead a significant change programme to bring the business back from receivership into a position where it could once again be a strong competitor in the market, with a sound and sustainable future. It was a big brief, laden with inherent challenges, but I took it in good faith and have dedicated myself fully to the goal since." More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news