Fonterra is already forecasting a record payout for milk this season, could it go higher?
Dairy farmers will get an early Christmas present this week, in the form of a substantial increase to their already-high milk payouts.
NZX Agrifax analyst Susan Kilsby said world prices for whole milk powder (WMP), relentless Chinese demand and New Zealand’s export volumes indicated a milk price of $8.70 a kilogram milksolids (MS).
Fonterra has said it would make milk price, advance rate and dividend announcements after next week’s board meeting.
It is required by the Dairy Industry Restructuring Act to make a re-calculation before December 15, for the purpose of setting the raw milk price to competitors.
Should it follow Kilsby’s prediction on milk price, as well as maintain the dividend guidance at 32c a share, a payout forecast for the season of more than $9/kg MS could result.
Kilsby has also predicted milk production growth of 8%, if good pastoral conditions persist during summer and autumn. . . .
A higher payout and higher production would be great for farmers and would provide a significant boost for the wider economy.
It would also add to the trend of more dairy conversions and operations changing from conventional sheep and beef farming to dairy support.