Demand from Asia has helped Fonterra set a new export record of 2.1 million tonnes of dairy product. The farmer co-operative, which processes about 92 per cent of the country's milk, shipped the product during the year ending July 31.
Chief executive Andrew Ferrier said consistent demand across the year,particularly from Asia, helped Fonterra cross the two million tonne milestone.
"The global recovery has been led by Asia, with demand from China particularly good," Ferrier said. "Every tonne that's left New Zealand has helped turn the tide with the balance of payment deficit."
Exports were 60,000 tonnes higher than 2008/09 and were a factor in the country's six month run of consecutive trade surpluses. Milk powder, butter and cheese were among the leading exports which saw the trade surplus hit $276 million in June and $639 million for the year to June.
Fonterra last week reaffirmed its forecast payout for 2010/11 of $6.90-$7.10kg of milksolids.
Chairman Sir Henry van der Heyden said that although international prices had recently declined there were a number of factors signalling a potential improvement. The average price of a basket of products in Fonterra's online auction this month fell 8.3 per cent, having fallen 13.7 per cent the previous month. BNZ economist Doug Steel said world growth was continuing, especially in Asia.
The decline in world prices had been the unwinding of a supply squeeze, Steel said.
"Maybe from here that supply squeeze might have run its course, this is all conjecture, but a reasonable possibility."
A $7.10 payout based on stable production levels could be worth about $9.1 billion. However, BNZ forecast production could rise by about 8-10 per cent.
Ferrier said dairying provided about a quarter of the country's exports and as economies such as China and other parts of Asia moved to higher living standards the outlook remained very positive.
"While we continue to see price volatility, dairy remains the standout performer, not only in primary sector exports, but also in overall exports and our consistent performance is not only good for farmers but for the economy as a whole."
