Fonterra says payout on the table

Photo / Ross Setford

Fonterra's board will consider its current farm gate milk price forecast for 2015/6 at its next meeting on August 7, a spokesman for the co-operative said.

The forecast, which currently stands at $5.25 a kg of milksolids, is under downward pressure after continued sharp falls on the GlobalDairyTrade auction platform.

"We are constantly monitoring the global situation and continuing to look at all the factors that impact the milk price across the current season, which has just started," Miles Hurrell, the co-operative's group director of co-operative affairs, said.

World dairy prices have slumped since March. At this morning's fortnightly GlobalDairyTrade auction, the GDT price index dropped by 10.7 per cent. Declines in wholemilk powder prices led the way down.

Dairy markets have been suffering from a big supply/demand imbalance, which has hit prices hard.
"There is a lack of demand globally - particularly from China and Russia - and a huge surplus of supply from New Zealand, Australia, the EU and the USA," Hurrell said.

Some bank economists have been revising their forecasts downward after this morning's auction.

ANZ Bank has revised down its Fonterra farm gate milkprice to $3.75 to $4.00 a kg of milksolids from its previous forecast of $4.50 a kg after this morning's sharp fall prices. The breakeven point for most farmers has been estimated at $5.70/kg.

See the recent decline in world dairy prices here:

Source: GDT