martes, 29 de septiembre de 2009

Dairy prices to recover in 2010

Fonterra Raises N.Z. Milk Price Forecast 12% on Demand Recovery
By Gavin Evans

Sept. 22 (Bloomberg) -- Fonterra Cooperative Group Ltd., the world’s
largest dairy exporter, raised its milk price forecast for the coming
year by 12 percent citing a recovery in global demand.

Fonterra, owned by about 10,500 New Zealand dairy farmers, will pay
NZ$5.10 ($3.64) for each kilogram of milk solids supplied in the year
to May 31, the Auckland-based company said in a statement. It is
estimating NZ$5.20 for last season and had been forecasting NZ$4.55
this year, the lowest in three years.

New Zealand’s dollar jumped to a 13-month high after Fonterra said it
is seeing “more positive sentiment and stronger demand” in global
markets. The strength of the currency, which has gained 24 percent
this year, “remains a concern,” Chairman Henry van der Heyden said
today.

“They’ve built the high currency in and that makes you think there is
a little more upside to come,” said Darren Gibbs, chief economist at
Deutsche Bank AG in Auckland. “Obviously, if the currency races away
that comfort would tend to come out.”

Fonterra accounts for almost 40 percent of the global trade in butter,
milk powder and cheese and sells product in 140 countries. It
processes about 92 percent of New Zealand’s milk, making it the
biggest player in an industry that accounts for about 20 percent of
the nation’s export receipts.

Today’s increase is a boost for farmers who must decide in November
whether to put more capital into Fonterra to help reduce its debt and
fund expansion plans through 2014.

Early Signal

“Receiving this signal relatively early on should help our farmers to
plan their farm operations with confidence for the rest of the
season,” Blue Read, chairman of Fonterra’s shareholder council, said
in an e-mailed statement.

Today’s increase will add about NZ$650 million to farm incomes next
year, based on the company’s 2008 milk output of 13.8 billion liters.

Fonterra will announce its sales and production for the year ended
July 31 tomorrow and made no mention today of the NZ$5.20 a kilogram
payout it has forecast.

The New Zealand dollar jumped to 71.87 U.S. cents after the
announcement, its highest since August 22, 2008. It bought 71.74 cents
at 2:40 p.m. in Wellington.

The high currency has been “fully factored” into the latest forecast,
van der Heyden said.

World milk-powder prices slumped to a five-year low in July as
consumer spending slowed faster than producers could reduce output and
the U.S. and Europe offered subsidies to help their farmers export
surplus product.

Prices surged 55 percent at Fonterra’s past two monthly auctions and
reflect a strengthening of demand for all dairy products, Chief
Executive Officer Andrew Ferrier said today.

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