Fonterra lower 2015/16 forecast milk payout

Fonterra lower 2015/16 forecast milk payout

Fonterra has lowered its 2015/16 forecast farmgate milk pay out by $0.25 to $3.90/kg of milk solids.

The key points are:

Fonterra revises 2015/16 forecast milk price

Reduced its forecast farmgate milk price for the 2015/16 season from $4.15 per kgms to $3.90 per kgms

Forecasting its NZ milk production to be at least 4 per cent lower than last season

Difficult conditions in the globally traded dairy market have put further pressure on the forecast

A total forecast available for payout of $4.35-$4.45 per kgms
Forecast cash payout of $4.25-$4.30 per kgms for a fully shared-up farmer after retentions

Long-term fundamentals for dairy are positive with demand increasing at over 2 per cent a year

Reduction in the supply available for export before then could mean prices recover earlier than currently expected

The NZD is slightly lower in response.

The interest rate markets have priced in a 26% probability of a 0.25% interest rate cut by the RBNZ at its OCR (official cash rate) meeting Thursday morning. However, a 0.25% rate cut is fully priced in within the next 6 months.

The current indicative rates are:
NZDUSD 0.6760 / 0.6785
NZDEUR 0.6140 / 0.6165
NZDGBP 0.4735 / 0.4760
NZDJPY 76.65 / 76.90
NZDAUD 0.9055 / 0.9080

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