Fonterra raises forecast milk payout
Dairy giant Fonterra has added some cream to its milk price forecast for the season, lifting it to $7.50 a kilogram of milksolids.
The move is a 50c/kg lift on the company's $7 forecast in May and follows continuing strong international dairy prices and an easing New Zealand dollar.
An increase was widely tipped, but $7.50 is 10c/kg more than many industry watchers predicted.
The estimated dividend remains at 32c a share. For farmer-suppliers to New Zealand's biggest company, this amounts to a forecast cash payout of $7.82.
Farmers will also be delighted Fonterra has confirmed a further lift in the advance rate schedule of payments they receive throughout the season for their milk. The advance has been increased from $5/kg to $5.50/kg set at the start of the season in June.
BNZ economist Doug Steel said a $7.50/kg milk price, if coupled with an expected 6 per cent lift in milk production over last season, will mean an extra $3.5 billion for the economy this dairy season over last year.