Fonterra Co-operative Group increased its 2017/2018 forecast farmgate milk price by 20c to $6.75 per kgMS (27.5 c/l).

The month of May is the lowest supply month in the New Zealand milk supply curve until milk supplies start to increase from August onwards.

Fonterra chair John Wilson said: “The higher milk price is good news for farmers who are still recovering after the two years of lower milk prices in 2015 and 2016.

"However, the higher milk price puts pressure on Fonterra’s earnings in a year which is already proving challenging due to the payment to Danone and the impairment of the co-operative’s Beingmate investment.

“As a result, we are revising our forecast normalised earnings per share guidance range down to 25-30 cents per share and our forecast dividend range for the full year down to 15-20 cents per share (0.8c/l).”

“The business’ revised earnings forecast is disappointing for our shareholders and unit holders. However, the total forecast cash payout for farmers increases to $6.90-$6.95/kgMS (28.3c/l), which is the third highest payout this decade.”

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