Fonterra has announced an increase in the forecast milk price and distributable profit which should take the payout up to $6.30 – $6.40.
In a newsletter to shareholders board chair Henry Van der Heyden says:
The Board met today and has announced an increase in the forecast Milk Price for 2009/10 to $6.10 per kgMS. This is up 40 cents from $5.70.
We are holding our forecast Distributable Profit range at 40-50 cents per share.
The forecast Dividend to farmers remains unchanged – we’re still targeting 20-30 cents per share. This means 10-30 cents per share of the Distributable Profit will likely be retained.
The board will discuss the opening forecast for next season at its May meeting and is advising farmers to budget on a similar price to this season’s.
This is the second best payout Fonterra has made and will be particularly welcomed by farmers who’ve had to dry off early because of the drought.
The company will make progressive increases in payments over the next six months which will help cash flow.
It might also help persuade farmers to buy more dry shares.
A media release from the company says:
Fonterra CEO, Andrew Ferrier, said that, since the last Milk Price forecast, dairy prices had remained relatively high and more stable than expected for several months, and had recently increased further.
“The global supply/demand balance for dairy products has shifted to a slight supply deficit. Demand from Middle East/North Africa and Asian markets continues to grow. On the supply side, global milk production has continued to slow, with production contracting in several key markets. For instance, supply has been affected by a tough winter in Europe, while North America and Australia production is also down. In New Zealand, the effects of drought mean Fonterra’s production is now projected to be similar to last season, compared to the modest increase that we forecast at the beginning of the season,” Mr Ferrier said.
Although the net effect was good news for the Milk Price in the short term, Mr Ferrier cautioned that the market continues to show significant volatility.
Jamie Mckay spoke to Andrew about the payout increase on the Farming Show today.
Very very good news.
Now all we need is John Key to ditch the bloody ETS.
Australia’s postponed theirs – could that provide an opportunity for us to do likewise Adolf?
Now both Ian Wishart at TBR.cc and AdoLf at No Minister are quoting a Der Spiegel report that suggests Angela Merkel no longer supports Europe going it alone on climate change.
The house of cards is coming down.
In the morning would be nice to hear Mike Hosking say the ETS is history and the government are are going to support John Boscawen’s amendment to Section 59!