Fonterra to stick to payout price

  • 10/12/2015

Fonterra is sticking to its guns with its forecast farmgate milk price.

The dairy co-operative said today it will maintain the forecast at $4.60 per kilogram of milk solids for the current season.

Chairman John Wilson said the Fonterra board and management believed international dairy prices would improve in the first half of next year.

"We are looking out over the next nine months and basing our forecast on the view that current, unsustainably low prices will continue to impact production levels globally.

"We support the consensus view in the market that an improvement will take place, but the market remains volatile. While there are signs of a recovery, particularly in China, we still need the imbalance between supply and demand to correct," he said.

Dairy prices gained 3.6 percent at Fonterra's GlobalDairyTrade auction last week halting a run of three consecutive declines.

The board also announced it would no longer offer its interest-free loan to farmers to cope with subdued dairy prices beyond December 31.

Mr Wilson said the scheme had provided around $390 million in support to around 75 percent of its farmers.