Westland shareholders see 30c rise in forecast payout

Westland Milk Products shareholders have received an early Christmas present with a 30c increase in the company's predicted payout to $7.90-$8.30/kg ms before retentions.

Coming on top of a previous season when shareholders experienced both drought and floods, the boost in income would be welcome, chief executive Rod Quin said.

Previously, the company's highest payout was $8.29/kg ms in 2007-08.

The payout prediction was made possible by a strong outlook for milk prices and continuing high demand for the co-operative's products, especially milk formula for China, Mr Quin said.

While forecast pricing looked firm, the New Zealand dollar was showing considerable volatility, which was why there was a 40c range in the prediction. Westland's milk production was up 16% on the season to date compared with last year but in line with budget.

Canterbury suppliers went from 14 in the 2012-13 season to 34 for this season and Canterbury milk was now 18% of total volume.

Federated Farmers West Coast dairy chairman Richard Reynolds said West Coast farmers would be ''ecstatic'' with the announcement.

''Going into the new year, with a good season so far, this will provide farmers with the opportunity to pay down debt, which was largely taken on from the drought and flood last year,'' he said.

Farmers had to budget sensibly, allowing for ''surprises'' next year and their tax bill. Earlier this month, Fonterra unexpectedly left its forecast milk price unchanged at $8.30 and slashed its dividend by 22c to 10c, meaning a forecast payout of $8.40/kg ms for the 2013-14 season.

Rabobank's latest dairy report said international dairy prices were expected to remain high for at least the first half of 2014.

The increase of export supply since September, as producers responded to improved margins, had been largely soaked up by continuing vigorous buying from China, analyst Tim Hunt said.

The global dairy market would enter 2014 with farmgate milk prices at record or near-record highs in many export and import regions. Rabobank expected a further increase in China's dairy purchases.

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