Fonterra raises forecast of milk price for current season to $6.00 from $5.25; total payout to farmers now seen in $6.50 to $6.60 range before retentions

By Craig Simpson

Fonterra has again lifted its forecast milk price for farmers - to $6.00 - from the previous $5.25 per kilogramme of milk solids.

The forecast has been gradually rising as GlobalDairyTrade auctions have been more positive.

When combined with the forecast earnings per share range for the 2017 financial year of 50 to 60 cents, the total payout available to farmers in the current season is forecast to be $6.50 to $6.60 before retentions.

Fonterra's opening pick for a milk price this year was only $4.25 and this has been increased three times now.

Chairman John Wilson said the increase reflects improvements in pricing since September, following the gradual rebalancing of global supply and demand.

“We’ve seen falling production in the major exporting regions, particularly Europe and Australia, and an unprecedented decline in New Zealand milk supply due to wetter than normal spring conditions across most regions. On balance, demand continues to be firm. As a result there has been a steady improvement in global dairy commodity prices and this is reflected in the improved forecast."

“We are very mindful that farm incomes will be affected this year because of lower milk production so we will be doing everything possible to build on our good start to the financial year and deliver the highest possible total payout to our farmers,” Wilson said

See here for the full dairy payout history.