Fonterra Co-operative Group is increasing its 2016/17 forecast Farmgate Milk Price by 15 cents to $6.15 per kilo of milk solids (kgMS).
Chairperson John Wilson says the increase reflects the strong fundamentals supporting global dairy markets.
“World dairy prices have risen in recent months and as we near the end of the season we have more visibility and certainty which makes us confident of our $6.15 position,” says Wilson.
Fonterra has also confirmed its forecast earnings per share range of 45 to 55 cents for the 2017 financial year, as it continues to target a dividend of 40 cents per share.
“Some of the challenges we faced in the third quarter could continue, but the business is committed to a strong fourth quarter particularly in Ingredients sales. Therefore, we have been able to confirm the earnings per share range and full year target dividend,” says Wilson.
“The higher forecast Farmgate Milk Price and the target dividend of 40 cents per share gives a forecast cash payout of $6.55 for a 100% shared-up farmer which is good news for our farmers and their communities,” he says.
In a further signal of confidence in the market outlook for dairy, the Co-operative is forecasting an improved Farmgate Milk Price of $6.50 per kgMS for the 2018 season.
Around early August, Fonterra hopes to announce the forecast earnings range for the 2018 financial year.
“The increase in the forecast Milk Price for the current season and the improved forecast for 2017/18 will be welcome news for our farmers following two challenging seasons on the farm,” says Wilson.
“Stronger production in March and April has partly offset lower peak milk production, and collections are now expected to be down 3% for the season, a much better outcome for our farmers than had been anticipated earlier in the year,” he says.
