Fonterra holds forecast as expected

Federated Farmers Dairy is unsurprised Fonterra Cooperative Group has held its 2010/11 forecast payout

“While this is good news it wasn’t unexpected by Federated Farmers,” says Lachlan McKenzie, Federated Farmers Dairy chairperson.

“When the revision was triggered several weeks ago, a number of doom and gloom merchants immediately assumed it meant a downgrade. This was based on the four globalDairyTrade auctions to August 2010, where dairy prices have eased 24 percent.

“A lot of things go into the matrix, which makes up the forecast payout. For example, Fonterra’s forward foreign exchange cover, spot sales and long term contract prices to name just three.

“globalDairyTrade itself currently makes up around ten percent of sales. The forecast payout is really a summation of all transactions and not just the last few auction results.

“In saying this, dairy farmers will have some budget certainty during a busy period calving,” Mr McKenzie concluded.