Fonterra has increased its forecast milk payout by 50 cents to $4.75 per kilo of milk solids.
In an email to shareholders, chair John Wilson said:
The forecast earnings per share is 50 – 60 cents and therefore at this stage in the season, budget on a forecast cash payout of $5.15.
Current global milk prices remain at unrealistically low levels, but have started to improve as global demand and supply continue to rebalance.
Milk production in the EU is now in decline and our New Zealand milk collection at this early stage is around 4 per cent lower for the year to date.
We have seen prices increase in recent GDT events. However, the high NZD/USD exchange rate is offsetting some of these gains.
We expect the market to be volatile over the coming months and will continue to keep our forecast updated as we move into the season.
With the forecast dividend on top of the increased forecast payout, the total will be above break-even for the majority of farmers but the sensible ones will continue to very cautious.