The milk price increases $1.10 to $5.70 per kilogram of milk solids (kgMS), while the distributable profit (value return) is 15 cents lower at 35 cents per kgMS.
This means the cooperative’s forecast of the total amount available for payout increases 95 cents to $6.05 per kgMS.
The new forecast compares with an opening forecast for 2009/10 of $4.55 per kgMS and a revised forecast of $5.10 per kgMS announced on 22 September 2009.
Fonterra chairman, Sir Henry van der Heyden, said although the recovery in consumer demand and the global economic situation remain relatively fragile, the higher forecast reflects the co-perative’s increasing confidence around the recent gains in international dairy prices.
“The improvement in global dairy markets reinforces that dairying is a business that’s in good heart with sound long-term prospects, both for Fonterra shareholders and the broader New Zealand economy.
However, Sir Henry cautioned: “A big gain like this in the payout forecast shows how much volatility there is in the market. It’s heading in the right direction and we’re making the most of the opportunities for our farmers, but we also know there’s a risk of rapidly rising prices potentially bringing on more milk from other countries. We saw this happen in 2007 and we saw how quickly the market can fall as a result.”
Source: Fonterra
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