FCG
28/05/2015 08:34
FORECAST
PRICE SENSITIVE
REL: 0834 HRS Fonterra Co-operative Group Limited
FORECAST: FCG: Forecast Farmgate Milk Price 2014/15 and 2015/16 forecast
28 May 2015
FONTERRA REVISES FORECAST FARMGATE MILK PRICE FOR 2014/15 SEASON AND
ANNOUNCES FORECAST FOR 2015/16 SEASON
Revised 2014/15 Forecast
Fonterra Co-operative Group Limited has today reduced its forecast Farmgate
Milk Price for the 2014/15 season to $4.40 per kgMS. Along with its
previously announced forecast dividend range of 20-30 cents per share, the
change amounts to a forecast Cash Payout of $4.60 - $4.70 that would be paid
to a fully shared-up farmer.
Chairman John Wilson said the revised forecast reflected the reality that
global commodity prices had not increased as expected.
"World markets are over-supplied with dairy commodities after farmers
globally increased production in response to the very good prices paid 12-18
months ago. This supply imbalance has heightened due to continuing good
growing conditions in most dairy producing regions.
"This is a tough season and we will continue to keep our farmers informed as
the season draws to a close given the current volatility," said Mr Wilson.
The forecast Farmgate Milk Price change for the current season will mean a
further revision to the Advance Rate Schedule of monthly payments to farmers.
2015/16 season opening forecast Farmgate Milk Price
The Co-operative also announced today an opening forecast Farmgate Milk Price
of $5.25 per kgMS for the 2015/16 season. This does not include the forecast
earnings for the 2015/16 financial year.
Mr Wilson said the forecast Farmgate Milk Price was based on Fonterra's best
view of long-term global dairy supply and demand.
"We can expect prices to recover going forward, and to see a rebalancing of
supply and demand over the season. However it is more difficult this early in
the season to determine exactly when this recovery will lead to a sustained
price improvement," said Mr Wilson.
Chief Executive Theo Spierings said the long-term fundamentals of global
dairy demand are strong.
"Our forecast for the new season takes into account a range of factors
including global milk production forecasts, the economic outlook of major
dairy importers, current inventory levels and geopolitical events," said Mr
Spierings.
"Given the season we are coming out of, we are absolutely focused on
improving farmer returns and driving the Co-operative's performance," said Mr
Spierings.
The Advance Rate will begin at 70 per cent of the forecast Farmgate Milk
Price, with an opening rate of $3.66 per kgMS.
Note: currency is New Zealand dollars unless otherwise stated.
For further information contact:
Connie Buchanan
Fonterra Communications
Phone: 022 698 5602
24-hour media line
Phone: +64 21 507 072
End CA:00264914 For:FCG Type:FORECAST Time:2015-05-28 08:34:26
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