Fonterra has announced an opening forecast of $6.50/kgMS (28 c/l) for the 2017/2018 season, which starts on 1 June.
In comparison to Ireland, a good proportion of the New Zealand dairy herd is dry now and will calve again in July and August. The co-op says the strong opening forecast is a further signal of confidence in the market outlook.
The forecast earnings range for the 2018 financial year will be announced around the beginning of August. The co-op has also lifted the 2016/2017 payout by 15c to $6.15/kgMS (26.4 c/l).
In a statement, Fonterra chair John Wilson said: “World dairy prices have risen in recent months and as we near the end of the season we have more visibility and certainty which makes us confident of our $6.15 position.”
Fonterra has also confirmed its forecast earnings per share range of 45 to 55 NZ cents (2.4 c/l) for the 2017 financial year, as it continues to target a dividend of 40 NZ cents per share. This is akin to what we call a milk price top-up in Ireland.
“The higher forecast farmgate milk price of $6.15 per kgMS and the target dividend of 40 NZ cents (1.7 c/l) per share gives a forecast cash payout of $6.55 (28.2 c/l) for a 100% shared-up farmer, which is good news for our farmers and their communities,” Wilson said.
It is now expected that Fonterra will finish the current season 3% down on supply compared with last year.