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Fonterra lowers 2012 payout forecast

Fonterra has revised its payout forecast down by 15 cents for the 2011/12 season to $6.75-$6.85 for a fully shared up farmer.

Fonterra has revised its payout forecast down by 15 cents for the 2011/12 season to $6.75-$6.85 for a fully shared up farmer.

The revised forecast comprises a lower farmgate price of $6.35 per kg milk solids, down from $6.50. Fonterra is required to consider its farmgate milk price every quarter as a condition of the Dairy Industry Restructuring Act (DIRA).

Chairman Sir Henry van der Heyden said the lower price forecast reflected declining commodity prices and a stronger New Zealand dollar.

“We’ve had price declines in the five out of the last six Global Dairy Trade (GDT) trading events."

Chief executive Theo Spierings said trends were indicating stronger global production continuing into 2012. 

“While we have had a strong start to the season in New Zealand, with record milk flows, we are also seeing higher milk production levels in the US and Europe.

“International milk powder demand, however, currently appears robust which should help offset the impact of the stronger milk supply growth."

Fonterra will announce its interim results and dividend on March 29.