Milk prices have bottomed out – FrieslandCampina

Dutch dairy giant FrieslandCampina has said the decline in milk prices has bottomed out, with world milk production set to decrease in the second half of the year.

Friesland added that demand for dairy products in the back end of the year will only show modest increases, mainly due to weak oil prices continuing to inhibit the purchasing power of oil economies and limited dairy demand from China.

Announcing its half-year results for 2016, Friesland said that milk prices paid to farmer suppliers were 17% lower than 2015. Friesland paid an average guaranteed milk price of 28c/litre in the first half of 2016 compared to an average milk price of 32c/l in the same period last year.

However, the Dutch processor has increased its milk price for the first time in nine months by lifting its September milk price by 1c to an equivalent of 27c/litre. Friesland said it had lifted its milk price following increased quotes for almost all dairy-based products, with butter and cheese as outliers.

Friesland reported a 2% decline in half-year revenues to €5.5bn, while profits fell 17% to €160m. The group said currency headwinds had negatively affected performance by €27m as the euro hardened against a basket of major currencies.

The co-op added it will make an interim payout to farmers totalling €64m, an average of €3,370 per supplier.