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New Zealand dairy giant Fonterra has increased its forecast milk price for the 2017/18 season to $6.55/kg of milk solids (26.4c/litre). In a statement overnight, the farmer-owned co-op said the global demand for dairy remains strong, which was supporting product prices.
Fonterra also announced an interim dividend of $0.10 per share for its farmer shareholders, which will be paid out in March. The co-op said it is forecasting a full-year dividend payout of $0.25 to $0.35 per share, depending on how the remainder of the financial year plays out.
Fonterra said its dairy farmer suppliers can expect to receive a year-ending milk price payout of $6.80/kg MS to $6.90/kg MS (27.4c/litre to 27.8c/litre), which would be the third highest payout for Fonterra suppliers over the last decade.
In total, Fonterra said around $10bn (€6bn) would flow into the rural economy of New Zealand as a result of this milk price payout.
Financial results
The co-op announced its year-ending milk price forecast as it reported half-year financial results. Fonterra reported half-year losses of $348m after it took a massive impairment charge of $405m on its investment in Chinese dairy company Beingmate.
Fonterra had half-year sales of $9.8bn, which was up 6% year-on-year. This was primarily due to an 11% decline in volume collections to 10.5bn litres after a severe drought hit New Zealand in November and December.
This resulted in the co-op having just over 2m tonnes of dairy products for sale in the first half of the year, which was 6% less than the same period last year.
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