Fonterra has cut its forecast payout for the 2011/12 season, citing the rising New Zealand dollar, declining global prices of commodities and increased production from Northern Hemisphere rivals.
The world's biggest exporter of dairy products lowered its farmgate milk price by 15 cents to $6.35 a kilogram, while keeping its so-called distributable profit in a range of 40 cents to 50 cents a share, it said in a statement today. That lowered the total forecast payout to a range of $6.75 to $6.85.
The revised forecast follows a run of weaker prices in the Auckland-based company's fortnightly GlobalDairyTrade auctions, which amounts to a 5.7 per cent drop in its benchmark GDT-Trade Weighted Index of 5.7 per cent since Dec. 13, when Fonterra last gave an estimate for the payout.
"We think dairy commodity prices are likely to remain under some pressure through to mid-2012," said chief executive Theo Spierings. "While we have had a strong start to the season in New Zealand, with record milk flows, we are also seeing higher milk production levels in the US and Europe."
The New Zealand dollar fell to 81.79 US cents from 82.01 cents immediately before the announcement.
