So what are the chances Fonterra’s payout to its farmer-suppliers could top $8kg/MS the soon-to-end current season?
That would give a timely boost to the rural economy and give farmers the kind of surge in incomes which would encourage them to step up the pace of adapting their dairy farming practices as the country moves to meet its climate change goals.
In March, Fonterra raised its forecast milk price for this season to between $7.30 and $7.90kg/MS with a mid-point of $7.60. That was up from $7.14 last season.
But now, after several good results from the fortnightly GDT auctions, and indications from futures contract prices, the speculation is that the payout could go higher.
While the GDT index slipped 0.7% at the latest auction this week, the price of whole milk powder, which has the most impact on what farmers are paid, gained 0.7% to an average US$4115 (NZ$5756) a tonne while skim milk powder, the second-most important, rose 2% to US$3433/t.
Butter prices slumped 12% to US$5035/t, weighed down by extra volume on offer. Continue reading “Two big announcements awaited from Fonterra – one deals with dairy payout, the other with the co-op’s capital structure”