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Fonterra raises milk price forecast for the fourth time
Dairy giant Fonterra raises the milk price forecast for the current 2021/2022 season for the fourth time. Compared to the first forecast, NZ$1,20 per kilo of milk solids (dry matter/fat and protein) has therefore been added to the expected price.
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The latest forecast is based on a milk price between NZ$8,90 and NZ$9,50 per kilo of milk solids. This represents an average price of NZ$9,20. The first forecast in May 2021 was based on an average price of NZ$8,00 per kilo of milk solids. Converted, with an average of 8,85 kilos of milk solids per liter, this comes down to a milk price of €46,70 per 100 kilos now, compared to €42,20 in May last year.
Light pressure on margin
According to CEO Miles Hurrell, the increase in the milk price forecast does put pressure on Fonterra's sales margins, but he also sees the company performing well in many sales markets. This is possible because the milk production in New Zealand is lower than first expected, about 25 million kilos of milk solids, or just under 300 million kilos. In addition, other large dairy exporters - such as the EU and the US - are also faced with lower than expected milk production.
Dividend forecast maintained
As a result, the expectation is maintained that Fonterra will still be able to pay a dividend of 25 to 35 New Zealand dollar cents per share (15 to 21 euro cents) at the end of the current financial year. These shares are held exclusively by Fonterra members.