Scoop has an Ethical Paywall
Work smarter with a Pro licence Learn More

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

 

NZ dollar recovers after Fonterra cuts payout to farmers

NZ dollar regains ground after Fonterra cuts payout to dairy farmers less than expected

By Tina Morrison

May 28 (BusinessDesk) - The New Zealand dollar gained back ground lost overnight after Fonterra Cooperative Group, the world's largest dairy exporter, reduced its payout to dairy farmers by less than some had expected.

The kiwi was trading at 85.62 US cents at 9am in Wellington, from 85.38 cents immediately before Fonterra's 8:37am announcement and 85.59 cents at 5pm yesterday. The trade-weighted index weakened to 79.72 from 79.87 yesterday.

Fonterra today pulled back its forecast for the coming season to $7 per kilogram of milk solids, better than the $6 payout expected by some. The company also cut its payout for the season winding down this month to $8.40 from a previous forecast of a record $8.65 as increased milk production dents prices. Soaring dairy prices underpinned New Zealand's strong terms of trade last year, and the local currency had fallen ahead of the Fonterra's announcement on concern a sharp decline in the payout could dent economic growth.

"Scaremongering earlier in the week may have depressed expectations into the $6 area and you get this knee jerk response accordingly," said Imre Speizer, senior market strategist at Westpac Banking Corp in Auckland. "It's about what most economists would have forecast. It is not a surprise. We are coming off a record high milk price but it is still a high number and it is still supportive for the economy and moreover Fonterra said they expect supply to rise even further so production is going to increase and production at a decent number is still positive for farm incomes."

Advertisement - scroll to continue reading

Are you getting our free newsletter?

Subscribe to Scoop’s 'The Catch Up' our free weekly newsletter sent to your inbox every Monday with stories from across our network.

Later today, traders will be focused on the ANZ business confidence survey for May, scheduled for release at 1pm. The Reserve Bank will be probably be eyeing the pricing intentions components of the survey for signs of inflation.

The New Zealand dollar was little changed at 92.41 Australian cents at 9am from 92.39 cents at 5pm yesterday ahead of a report on Australian first quarter construction activity today.

The kiwi was little changed at 87.26 yen from 87.28 yen yesterday, at 62.76 euro cents from 62.68 cents and advanced to 50.91 British pence from 50.77 pence yesterday.

(BusinessDesk)

© Scoop Media

Advertisement - scroll to continue reading
 
 
 
Business Headlines | Sci-Tech Headlines

 
GenPro: General Practices Begin Issuing Clause 14 Notices

GenPro has been copied into a rising number of Clause 14 notices issued since the NZNO lodged its Primary Practice Pay Equity Claim against General Practice employers in December 2023.More

SPADA: Screen Industry Unites For Streaming Platform Regulation & Intellectual Property Protections

In an unprecedented international collaboration, representatives of screen producing organisations from around the world have released a joint statement.More

 
 
 
 
 
 
 
 
 
 
 
 

Join Our Free Newsletter

Subscribe to Scoop’s 'The Catch Up' our free weekly newsletter sent to your inbox every Monday with stories from across our network.