Fonterra has held its forecast payout at $7.15 – $7.25 per kilo of milk solids for the 2011/12 season in spite of uncertainty in global markets and a high dollar.
Chairman Sir Henry van der Heyden said the Board had reconfirmed the forecast against a background of significant volatility in global markets and foreign exchange rates.
Sir Henry said the recent fall in food commodity prices was largely anticipated when Fonterra announced its opening forecast for 2011/12.
“In volatile economic and market conditions, we could face a range of factors that may affect the season’s Milk Price. But at this very early stage of the season we see no reason to alter the forecast,” Sir Henry said.
“We will continue to monitor possible slowing global economic growth that might translate into weaker dairy demand.”
The final payout for the 2010/11 season will be announced later this month. It is expected to be at or close to the forecast of $8.00-$8.10 per kilo before retentions although iPredict has an 88% probability it will be higher than that.
The forecast is a valuable tool for farm budgeting and the company does its best to ensure it is as accurate as it can be given the difficulty of that with so many financial, political and climatic variables which can affect both demand and supply of milk all over the world.
However, the drop in payout from the forecast a couple of seasons ago was a reminder for farmers to budget conservatively and most have used this season’s higher returns to reduce debt.