Fonterra forecast milk price reviews for 2015/16

The Fonterra has reduced its forecast of price of milk to the 2015/16 station of NZ $ 4.15 ($ 2.80) per kilogram of milk solids [equivalent to NZ $ 0.34 (US $ 0.23) per kilogram of milk], to NZ $ 3.90 (US $ 2.64) per kilogram of milk solids [NZ $ 0.32 ($ 0.21) per kilogram of milk].
When combined with the projected earnings per share, which are 45-55 cents (30.5 to 37.3 cents), this means a total payment forecast of NZ $ 4.35 (US $ 2.95) to NZ $ 4.45 ($ 3) per kilogram of milk solids [NZ $ 0.36 (US $ 0.24) to NZ $ 0.37 ($ 0.25) per kilogram of milk] and would currently forecast cash payment of NZ $ 4.25 ($ 2.88) to NZ $ 4.30 ($ 2.91) per pound of solids milk [NZ $ 0.35 (US $ 0.23) to NZ $ 0.36 (US $ 0.24) per kilogram of milk] to the producer after the withholding of taxes.
The Fonterra is predicting that its milk production in New Zealand will be at least 4% less than in the previous season, as producers respond to low prices, reducing the size of the herd and providing significantly less supplements, which should have an impact on production this fall.
The President, John Wilson, said the tough conditions in the global market of dairy products have placed more pressure on the forecast. "One more reduction in the forecast of the price of milk is the last thing the producers want to hear in a very challenging season. In moments like this, businesses need to do everything they can to direct every penny back to producers. "The management is totally focused on cost reduction and the generation of money in any business. The continuous increase in the financial performance and strength of our balance sheet will provide opportunities to support the producers '' cash flows. We will provide an update about it in our interim results on day 23 March ".
The Chief Executive of Fonterra, Theo Spierings, said that exports and imports were unbalanced in the last 18 months due to the higher than expected increase in the production of Europe and to lower imports from China and Russia — the two largest importers of dairy products. "The period of time for rebalancing changed and depends largely on the reduction in the production – particularly in Europe – in response to these global prices unsustainably low dairy".
"The long-term fundamentals for the dairy sector are positive, with the increase in demand in more than 2% per year due to world population growth, increase of the middle class in Asia, urbanization and demographic conditions favorable. Our forecast is based on the absence of significant changes in the offer or on global demand before the end of the year. However, a reduction in the supply available for export before that could mean a reduction in prices before what is expected today, "said Spierings.
In 3/8/16-1 New Zealand dollar = $ 0.67826
1.47436 New Zealand dollar = $ 1