Markets hate uncertainty

2014 Ingredients revenue: 1.524 billion
2015 Ingredients revenue: 1.203 billion
2016 Ingredients revenue: 0.886 billion

Ingredients prices have risen over 50% in 2017.
https://www.globaldairytrade.info/en/product-results/ (scroll down to graph)
Even with the projected 20% loss in milk supply, 2017 Ingredients revenue will exceed 1 billion. A 30% loss will still better 2016 results.

There is a lot of uncertainty overhanging MG and the dairy industry generally:

1. Milk supply
I've read some disinformants suggest the milk loss is already 30% but then I read this recent article refuting that:
http://www.weeklytimesnow.com.au/ag...g/news-story/57b6bbde6c553a7b47f17a4fc58a6b91
Most notably:
"MG has recorded a “net increase” in milk in the past couple of months as some farmers opt to join the processor."

2. Chinese regulation
The Chinese are moving to limit the number of imported players in the dairy foods segment.
http://www.stuff.co.nz/business/farming/86537607/Playing-Chinas-infant-formula-game
As it is, the MGC price hasn't factored in booming Chinese sales like BAL. However with a substantial unitholder on its register in the Chinese Communist Party owned China Resources, there is likelihood that MG will gain approval. Especially as product security is paramount to them and MG offers that from cows in paradise right up to their distribution centre in Qingdao. Product counterfeiting appears to be a big problem.
MG may end up spending their 260million bmf capex in a takeover of a providore that fails to gain registration.

3. Management upheaval
Doesn't exactly send a positive message to investors. However it's what a kangaroo court of assorted news media, and dairy industry representatives have been wanting since the April downgrade

4. Profit downgrade outstanding
Unquantified at this stage but planned in order to bring the 2017 FMP to compete with market

Markets hate uncertainty. I notice though that overall short positions remain unchanged.
http://www.shortman.com.au/stock?q=mgc
It hasn't been shorters bringing the price down but someone selling a large position and fear building on fear as stop loss orders trigger. I don't know who it is but unless it's China Resources or JD.Com, I'm no that concerned.

May/June 2016 seemed a bit scary but now I feel confident MG will better their 2016 profit, pay a market competitive FMP and write off the MSSP. The dairy foods segment and Devondale brand products performed strongly in 2016. This can only be enhanced by the completion of the new AUD91 million Cobram plant up and running in Feb17.

Management have been ultra conservative, trimming costs since the April downgrade. The incoming CEO will be more gung ho. He would hope that February's 1H17 financials will provide him with the ammunition to write off the MSSP and engender farmer support for his administration.