Fonterra may not be flavour of the month but that hasn’t put investors off.
The company has raised $800 million in less than a week with a bond offer that was oversubscribed by 267%.
This is a sign that investors have more faith in Fonterra and the dairy industry than the doomsayers who’ve been prophesying disaster by focussing on the difference in this year’s payout compared with last years without pointing out that $5.10 is still the third best payout the company has made.
Those whose glasses are perpetually half empty also don’t take into account that while the figures in the income column are smaller, so are those in the expenditure one thanks to big drops in interest rates and the price of fuel and fertiliser.
We may not be rolling in clover, but we’re still growing grass and converting it to protein and while the world may not be paying as much as it was a few months ago there’s still a market for milk.
Rabobank’s senior analyst Hayley Moynihan says the medium to long term outlook is still good and that global supply is contracting in Europe and the USA while falling prices are making dairy products more competive which will increase demand.
There’s another glimmer of hope for us from DairyCo which reports that the British milk supply is declining.
It’s too soon to break out the champagne again, but there’s enough hope there to postpone the order for hair shirts.