Dry weather conditions, particularly in the North Island, in
mid-December and January had resulted in a slowdown in milk
supply growth, Fonterra chief executive Theo Spierings said
''We had a strong start to the season and milk collection
volumes were running 6% ahead of last season on a
''However, the dry conditions mean we are currently
forecasting total milk collection volumes to finish
approximately 1% ahead for the full season,'' he said.
Primary Industries Minister Nathan Guy yesterday declared a
state of drought in Northland, with other regions likely to
''This is recognition that we are now beyond what is a normal
dry summer, and into an extreme climatic event. The entire
North Island is extremely dry, but Northland is one of the
worst-hit areas,'' Mr Guy said.
Mr Spierings confirmed that Fonterra was keeping its payout
forecast range unchanged at $5.90 to $6, before retentions,
for farmers with full shareholdings.
Its forecast farmgate milk price for the season was $5.50 per
kg of milk solids, unchanged from the previous forecast.
Fonterra's forecast earnings per share (eps) remained at 40c
Global dairy prices remained relatively flat through December
and January, with the global dairy trade-trade weighted index
increasing 2% in the period.
The index had since gained 5% in February.
''Given current global conditions, our farmgate milk price
forecast anticipates global dairy prices are likely to move
higher in the second half of the season,'' Mr Spierings said.
The current farmgate milk price was based on no substantial
change to the exchange rate for the rest of the season. If
there was a further strengthening of the dollar against the
United States currency, that could adversely affect the
farmgate milk price, he said.