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

 

China Shopping: NZ-China FTA Upgrade Agreed Among Slew Of New Deals

New Zealand Prime Minister Bill English and China Premier Li Keqiang signed off a series of cooperation deals spanning trade, customs, travel and climate change and confirmed commencement of official talks on an upgrade to the nine-year old free-trade agreement between the two countries. More>>

ALSO:


Media: TVNZ Flags Job Cuts To Arrest Profit Decline

Chief executive Kevin Kenrick said the changes were aimed at creating "a sustainable future video content business for TVNZ in an ever-changing media market." More>>

ALSO:

Reserve Bank: Wheeler Keeps OCR At 1.75%

Reserve Bank governor Graeme Wheeler kept the official cash rate unchanged at 1.75 percent, as expected, and reiterated his view that the benchmark rate doesn't need shifting for the foreseeable future. More>>

ALSO:

Trade Plans: Prime Minister's Speech To International Business Forum

"The work to improve public services, build infrastructure, and solve social problems is possible only because we have enjoyed sustained, solid economic growth. A big reason for that is the Government’s consistent agenda of economic reform, and our determination to open up more opportunities for trade with the world." More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news