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

 

Budget: Irrigate (Good Times, Come On!)

Additional grant funding of $26.7 million over the next three years plus a capital boost of $63 million towards irrigation investments in Budget 2017 will deliver economic and environmental benefits through better use of water... More>>

ALSO:

Silver Fern Farms: Proposal To Close Fairton Sheepmeat Plant

Silver Fern Farms has advised its people of the proposal to permanently close the site, and has discussed potential transfer options to its other sites in the region as part of the consultation process...
More>>

ALSO:

MPI: Myrtle Rust Appears In Taranaki

The nursery in Waitara (just north of New Plymouth) reported suspected myrtle rust symptoms on young plants to the Ministry’s 0800 number yesterday (Tuesday). More>>

ALSO:

Aged Care Survey: Job Stresses Put Pressure On Workforce

Staff in the aged care sector are stressed, struggling with work hours and aren’t feeling financially rewarded for their efforts. More>>

ALSO:

De-Sanctioning: First Iran Meat Shipment Welcomed

Primary Industries Minister Nathan Guy has welcomed the first export shipment of meat to Iran, scheduled for processing and export later this month by Wellington company Taylor Preston. More>>

ALSO: