Fonterra unveils divestment plan
Fonterra is exploring full or partial divestment options for its global Consumer business, as well as its integrated businesses Fonterra Oceania and Fonterra Sri Lanka.
After five consecutive increases in Global Dairy Price (GDT) auctions, a $7/kgMS opening forecast for the new 2017-18 season is feasible.
However, BNZ senior economist Doug Steel says farmers should not expect Fonterra to announce such a price this week.
With the season set to begin on June 1, it’s early days for predicting how dairy prices will play out during the next 12 months, Steel says.
BNZ does not issue an opening forecast; it is predicting the final payment for the season to be about $6/kgMS.
“With five straight price increases on GDT, a $6 payout for the new season now looks more certain,” he told Rural News.
“But it’s hard to forecast where prices will go; it also depends where prices are when most of our products are sold.”
Steel says BNZ does not forecast an opening price because “it’s hard to forecast what someone else (Fonterra) will forecast”.
“But with current prices and currency levels, a $7-plus payout is possible…. But I will be surprised if Fonterra’s forecast payout will be anywhere near that. It’s very early days and the season has not even started.”
The GDT price index rose 3.2% on the previous auction; a strong demand for fat products saw a big rise in butter and anhydrous milk fat prices.
Surprisingly, the price for Fonterra’s flagship product, whole milk powder, rose 1.3% over the previous auction, despite the market forecasting a 2% drop. The WMP price now sits at US$3312/tonne.
Westpac senior market strategist Imre Speizer says the rise in the GDT price index was led by fat products.
“WMP was more subdued, up 1.3%, which was slightly above futures prices which implied a 2% fall. The positive outcome has implications for analysts’ forecasts of the milk payout for the next season (2017-18),” he says.
Butter prices rose 11.2% to US$5479/t and AMF 8.2% to US$6631/t.
Steel agrees that demand for fat products remains strong; it also explains the price difference between WMP (US$3312/t) and skim milk powder (US$1998/t).
For the current season, Fonterra has set the milk price at $6/kgMS.
Steel says compared to last season’s $3.90 payout it makes a world of difference to farmers.
Fonterra’s board meets on Wednesday and an announcement is expected on the new season’s opening forecast payout soon after the meeting.
Bankers have been making record profits in the last few years, but those aren’t the only records they’ve been breaking, says Federated Farmers vice president Richard McIntyre.
The 2023-24 season has been a roller coaster ride for Waikato dairy farmers, according to Federated Farmers dairy section chair, Mathew Zonderop.
Ministry for Primary Industries (MPI) director general Ray Smith says job cuts announced this morning will not impact the way the Ministry is organised or merge business units.
Scales Corporation is acquiring a number of orchard assets from Bostock Group.
Family and solidarity shone through at the 75 years of Ferdon sale in Otorohanga last month.
The Ministry for Primary Industries (MPI) has informed staff it will cut 391 jobs following a consultation period.
OPINION: This old mutt well remembers the wailing, whining and gnashing of teeth by former West Coast MP and Labour…
OPINION: Your canine crusader gets a little fed up with the some in media, union hacks, opposition politicians and hard-core…