Fonterra is lifting its forecast total available for payout for the 2015/16 season and also signaled that milk production will also be lower.

The forecast total available for payout comprises:

  • Forecast Farmgate Milk Price $4.60 kgMS – up 75 cents
  • Forecast earnings per share of 40 – 50 cents.

According to Fonterra the improved forecast Farmgate Milk Price reflected the lift in global prices since July with Whole Milk Powder increasing 44% and Skim Milk Powder increasing 21% over the period.

However, its says current global prices are still unsustainable.

“While there are signs that supply growth globally is easing, a lift in demand, which is needed for prices to continue to rise, is still to come,” said its Chairman John Wilson.

Fonterra’s farmer shareholders have also been able to apply to receive a loan of an additional 50 cents per share-backed kilogram of milk solids for production through to December, through Fonterra Co-operative Support.

So far, over 7,000 applications have been received, around 70% of farmer shareholders.

Lower production

Fonterra has also lowered its forecast milk production for the season.

It says production is currently 5% behind last season and the company is currently tracking 8% down on last season on a weekly basis.

It says farmers are responding to the tough economic conditions and with cow numbers down, less supplements being fed and challenging weather conditions for much of the country,

“We now expect production to be down by more than 5% for the season,” said Wilson.