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

 

Scoop Business: NZ Dollar Falls To 3-Year Low As Investors Favour Greenback

The New Zealand dollar fell to its lowest in more than three years as investors sold euro and bought US dollars, weakening other currencies against the greenback. More>>

ALSO:

Scoop Business: NZ Govt Operating Deficit Smaller Than Expected

The New Zealand’s government’s operating deficit was smaller than expected in the first five months of the financial year as a clampdown on expenditure managed to offset a shortfall in the tax-take from last month’s forecast. More>>

ALSO:

0.8 Percent Annually:
NZ Inflation Falls Below RBNZ's Target

New Zealand's annual pace of inflation slowed to below the Reserve Bank's target band in the final three months of the year, giving governor Graeme Wheeler more room to keep the benchmark interest rate lower for longer.More>>

ALSO:

NASA, NOAA: Find 2014 Warmest Year In Modern Record

Since 1880, Earth’s average surface temperature has warmed by about 1.4 degrees Fahrenheit (0.8 degrees Celsius), a trend that is largely driven by the increase in carbon dioxide and other human emissions into the planet’s atmosphere. The majority of that warming has occurred in the past three decades. More>>

ALSO:

Scoop Business: New Zealand’s Reserve Bank Named Central Bank Of The Year

The Reserve Bank of New Zealand’s efforts to stifle house price inflation by using new policy tools has seen the institution named Central Bank of the year by Central Banking Publications, a publisher specialising in global central banking practice. More>>

ALSO:

Science Media Centre: Viral Science And Another 'Big Dry'?

"Potentially, if there is no significant rainfall for the next month or so, we could be heading into one of the worst nation-wide droughts we’ve seen for some time," warns NIWA principal climate scientist Dr Andrew Tait. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news