The impact of the coronavirus is not lowering milk price for Fonterra suppliers in New Zealand despite the New Zealand dependence on the Chinese market for milk powder.
In a note to all Fonterra milk suppliers, the chair of Fonterra said it had reviewed its forecasted milk price between $7/kg MS and $7.6/kg MS (28c/l and 30c/l) and they had decided to hold that price.
Fonterra chair John Monaghan wrote in the note: “We don’t take the coronavirus situation lightly. There has been a slowdown in processing of containers at ports and we are managing the flow of our product into China to avoid congestion.
Impact
"Currently, our product is continuing to be cleared by customs and quarantine officials. Many of the restaurants and food outlets in China have not reopened since Chinese new year, which is having a major impact on the operations of some of our foodservice customers.
"We are working with them to help them where we can and to understand the full extent to which it is impacting their business, and therefore ours.”
Dividend
The dividend to shareholders has also been held at previous forecasts of between NZ15c to NZ25c/share (26c to 43c/share in euro).
Dry conditions in the North Island are already slowing milk supply, with some herds starting to dry off cows already.
Extreme flooding in Southland also affected supply. As a result, Fonterra has revised downwards expected milk collections from 1.530m kg MS to 1.515m kg MS.
We are taking a prudent approach and maintaining our full-year forecast earnings range
Some farmers in the North Island are already moving cows off farm to reduce feed demand while others expect to be dry at least 20 to 30 days in advance of expected dry off date.
Price
In a public company update, Fonterra CEO Miles Hurrell reiterated the chairman’s comments on price.
“The momentum we saw in the first three months of the financial year has continued, and as we approach the interim results our underlying earnings are tracking well. However, given the potential significant risks that could arise from coronavirus in the second half, we are taking a prudent approach and maintaining our full-year forecast earnings range.
"The current situation is very fluid and uncertain. However, we have already contracted a high percentage of our 2020 financial year’s milk supply and this is helping us manage the impact of coronavirus, he said.
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The impact of the coronavirus is not lowering milk price for Fonterra suppliers in New Zealand despite the New Zealand dependence on the Chinese market for milk powder.
In a note to all Fonterra milk suppliers, the chair of Fonterra said it had reviewed its forecasted milk price between $7/kg MS and $7.6/kg MS (28c/l and 30c/l) and they had decided to hold that price.
Fonterra chair John Monaghan wrote in the note: “We don’t take the coronavirus situation lightly. There has been a slowdown in processing of containers at ports and we are managing the flow of our product into China to avoid congestion.
Impact
"Currently, our product is continuing to be cleared by customs and quarantine officials. Many of the restaurants and food outlets in China have not reopened since Chinese new year, which is having a major impact on the operations of some of our foodservice customers.
"We are working with them to help them where we can and to understand the full extent to which it is impacting their business, and therefore ours.”
Dividend
The dividend to shareholders has also been held at previous forecasts of between NZ15c to NZ25c/share (26c to 43c/share in euro).
Dry conditions in the North Island are already slowing milk supply, with some herds starting to dry off cows already.
Extreme flooding in Southland also affected supply. As a result, Fonterra has revised downwards expected milk collections from 1.530m kg MS to 1.515m kg MS.
We are taking a prudent approach and maintaining our full-year forecast earnings range
Some farmers in the North Island are already moving cows off farm to reduce feed demand while others expect to be dry at least 20 to 30 days in advance of expected dry off date.
Price
In a public company update, Fonterra CEO Miles Hurrell reiterated the chairman’s comments on price.
“The momentum we saw in the first three months of the financial year has continued, and as we approach the interim results our underlying earnings are tracking well. However, given the potential significant risks that could arise from coronavirus in the second half, we are taking a prudent approach and maintaining our full-year forecast earnings range.
"The current situation is very fluid and uncertain. However, we have already contracted a high percentage of our 2020 financial year’s milk supply and this is helping us manage the impact of coronavirus, he said.
Read more
Farmer Writes: a 550-cow New Zealand herd with Irish genes
Fonterra streamlines its Chilean operations and appoints new CEO in China
A day in the life of: a kiwi milking cows in Ireland
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