Fonterra Trims Forecast for Milk Payout

Fonterra Trims Forecast for Milk PayoutFonterra, the dairy exporter from New Zealand trimmed its forecast for milk payout on Wednesday to a low of six-years as a result of deflating dairy prices globally. The co-operative said that the ban on dairy imports in Russian are likely to keep the prices volatile globally even in the months ahead.

Fonterra slashed the forecast price of milk which it pays to its farmer shareholders from an earlier expected NZ$6.00 to NZ$5.30 ($4.26) per kg of milk solids. This was the lowest forecast price since the season of 2008/09.

Following the import ban in Russia imposed in retribution for the global sanctions over the clash over issues with Ukraine, the global supply has increased. Russia is one of the biggest cheese importers from the European countries.

The U. S along with the nations in the euro zone is also sprucing up supply following the increasing demand for imported infant formula in China. The demand in China has increased greatly as the middle class seems to develop taste for cheese, milk, and yoghurt.

Theo Spierings the CEO of Fonterra told reporters "It's a very volatile environment at the moment. It's a very strong picture on the supply side but there are issues on the demand side."