In this month's edition of the Monthly Dairy Report, NZX Agrifax is forecasting another fall in the predicted dairy payout for the current season to $5.15 per kg milk solids.
NZX Agrifax's Senior Analyst, Susan Kilsby, said the fall is in line with continued weakness in dairy commodities, a pessimistic outlook for the dairy market and the ongoing strength of the New Zealand dollar against the US.
"There is definite pessimism in the market about the dairy sector and a feeling that dairy commodity prices are still yet to bottom out. We believe that this, together with the ongoing global economic crisis and the New Zealand dollar remaining in the mid 50 cent range against the US, are strong indictors that dairy company payouts for the current season will again be adjusted downwards. We have already seen a dramatic downward forecast prediction by Westland for its payout for this season to between $4.10 and $4.40 per kg of milk solids," said Kilsby.
"Even if there is an upswing in commodity prices in early 2009, we believe that any positive movement is now too late to have an effect on the current season's payouts. We suspect that all of the processing companies will revise their predicted payouts for the current season downward before too long, and we expect Fonterra to adjust its payout downward to around the $5.15 to $5.20 per kg range shortly," said Kilsby.
NZX Agrifax has been monitoring the dairy sector and predicting the seasonal payouts since 1991. The payout predictions take into consideration factors including market conditions, commodity prices and exchange rate movements.
Fonterra makes up approximately 95% of NZX Agrifax payout prediction, which also takes into account the predicted payouts of New Zealand's other main processors. December's edition of the NZX Agrifax Dairy Report is scheduled for release today and will provide more detail on the dairy commodity markets and the NZX Agrifax payout predictions.
