Archive: Fonterra forecasts reduced milk price for 2014/15 season

Published 24 September 14

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Following the publication of its annual financial accounts for 2013/14, showing its highest-ever cash payout to farmer shareholders, Fonterra have revised their forecast farmgate milk price 2014/15 to NZ$5.30 per kilograms of milk solids (kgMS). The record payout this year of NZ$8.50kgMS comprised of a farmgate milk price of NZ$8.40kgMS plus a dividend of 10 cents per share.

Fonterra have lower its forecasted milk price due to “an uncertain outlook for the global economic environment” and the impacts of increased price volatility. Milk production is expected to increase in all of the major producing countries in 2014/15, while global demand growth is currently impacted by high inventory levels in China and the Russian import ban on dairy products. The impact of this imbalance between supply and demand will directly affect returns on Fonterra’s Reference Commodity Products (WMP, SMP and their by-products), which account for approximately 75% of the cooperative’s product sales and are used to calculate the forecasted farmgate milk price.