This the third year that the world’s largest exporter will pay a milk price to its farmer suppliers, which is below the estimated $5.25 /kg (23.95c/l) cost of production in New Zealand.
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This is below the prediction by analysts last week of $4.43 (20.21 c/l) to as high as $6 (27.38 c/l) before the end of the season.
This the third year the world’s largest exporter will pay a milk price to its farmer suppliers, which is below the estimated $5.25 /kg (23.95 c/l) cost of production in New Zealand.
Cameron Bagrie, economist with ANZ Bank, said: “The recovery in milk prices to a more sustainable level keeps getting pushed out. They have come in on the low side – that might prove to be conservative but it does suggest to me that they are pretty cautious about when we are going to see a sustained uplift in milk prices.”
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International production
Fonterra chair John Wilson said he expects global prices to improve gradually over the season as international production is reined in response to low prices. He also said the co-op would bring forward this year’s milk on top of earlier dividend payments to help the cashflow situation of suppliers.
CEO Theo Spierings said that global demand is likely to increase by an annual 2% to 3% on the world’s expanding population and growing middle classes. He expects that it will lead to a rebalancing of international markets.
He went on to say “we will remain focused on securing the best possible returns for our farmers by converting their milk into high-value products for customers around the world”.
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This is below the prediction by analysts last week of $4.43 (20.21 c/l) to as high as $6 (27.38 c/l) before the end of the season.
This the third year the world’s largest exporter will pay a milk price to its farmer suppliers, which is below the estimated $5.25 /kg (23.95 c/l) cost of production in New Zealand.
Cameron Bagrie, economist with ANZ Bank, said: “The recovery in milk prices to a more sustainable level keeps getting pushed out. They have come in on the low side – that might prove to be conservative but it does suggest to me that they are pretty cautious about when we are going to see a sustained uplift in milk prices.”
International production
Fonterra chair John Wilson said he expects global prices to improve gradually over the season as international production is reined in response to low prices. He also said the co-op would bring forward this year’s milk on top of earlier dividend payments to help the cashflow situation of suppliers.
CEO Theo Spierings said that global demand is likely to increase by an annual 2% to 3% on the world’s expanding population and growing middle classes. He expects that it will lead to a rebalancing of international markets.
He went on to say “we will remain focused on securing the best possible returns for our farmers by converting their milk into high-value products for customers around the world”.
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