Fonterra chief executive Miles Hurrell said Fonterra had been able to make changes based on recent improvements in global commodity prices combined with Fonterra\u2019s well-contracted sales book.<\/p>\n
\u201cGlobal milk production remains above seasonal norms, meaning the risk of further volatility in pricing remains,\u201d Hurrell said.<\/p>\n
\u201cAs such, we continue to take a balanced approach with our farmgate milk price forecast.\u201c<\/p>\n
Farmers on Thursday approved a $2 per share capital repayment arising from the sale of Mainland.<\/p>\n
\u201cThe $3.2b being returned to farmers is money that is not currently in our economy, so it\u2019s a game-changer and it will provide some stimulus,\u201d DairyNZ chief executive Campbell Parker said.<\/p>\n
\u201cHow they choose to invest that will depend on their own situation, but what we\u2019re hearing is that some will repay some debt and some will use it to upgrade and do on-farm improvements,\u201d he told the Herald.<\/p>\n
\u201cSome have already used it to expand their operations and then some may even consider things like succession or off-farm investment.\u201d<\/p>\n
On the milk price upgrade, Parker said it reflected strong demand for protein globally, and for milk products in particular.<\/p>\n
\u201cYou\u2019re certainly seeing that not only in milk, you\u2019re certainly seeing that in meat-based products as well,\u201d he said.<\/p>\n
Forsyth Barr senior analyst Matt Mongomerie said that, in aggregate, the $2 capital return, plus the special dividend and Forsyth Barr\u2019s full-year dividend estimate of 46c, implied $4.2b of distributions to farmers this financial year.<\/p>\n
Including the improved farmgate milk price, farmers were likely to receive a payout of $12.10 per kg, ahead of the prior year\u2019s record high of $10.73, he said.<\/p>\n
Fonterra said its forecast earnings guidance from continuing operations remained unchanged at 45-65c per share.<\/p>\n
The co-op expects the Lactalis transaction to be complete in the first quarter of the 2026 calendar year, subject to separation of the businesses from Fonterra and remaining regulatory approvals being received.<\/p>\n
ANZ economists said last year the $3.2b capital return to Fonterra would provide a tailwind to GDP growth through 2026.<\/p>\n
\u201cMuch of the funds will instead go into debt reduction and some of it will be spent on imports such as new machinery,\u201d ANZ said.<\/p>\n
ASB Bank said the special dividend added to the positive story that had been building for some time.<\/p>\n
The bank raised its own forecast to $9.50\/kg from $9.20\/kg after a strong Global Dairy Trade auction this week, when the GDT Price Index rose 3.6%.<\/p>\n
This followed a 6.7% leap from the previous auction two weeks ago and made it the fourth consecutive positive result since the start of the year.<\/p>\n
Whole milk powder, which has the biggest influence on Fonterra\u2019s farmgate milk price, recorded a 2.5% lift, reaching an average of US$3706\/tonne.<\/p>\n
Skim milk powder \u2013 Fonterra\u2019s second-biggest reference product \u2013 rose 3%, to an average of US$2973\/tonne.<\/p>\n
Meanwhile, global milk production remains above seasonal norms, meaning the risk of further volatility in pricing remains.<\/p>\n
DairyNZ said in 2024\/25, 58% (6060) of New Zealand dairy herds operated under an owner-operator structure, 26% (2708) operated under a sharemilking agreement and 13% operated under a contract milkers\u2019 agreement.<\/p>\n
As a sector, dairy farming is a top 10 purchaser in one third of all industries, representing 31.5% of GDP, it said in a report.<\/p>\n
In the year to June 30, 2025, New Zealand exported a record $27.15b of dairy products, a 16.87% gain on the year prior, after soft milk production in the US and the EU contributed to tight global supplies and strong dairy prices.<\/p>\n
DairyNZ said the value of dairy exports had risen 42.5% (or $8.1b) in the five years to June 30, 2025.<\/p>\n
\u201cDairy now generates more than one in every four dollars of New Zealand\u2019s foreign exchange receipts from goods and services exports,\u201d it said.<\/p>\n
Jamie Gray is an Auckland-based journalist, covering the financial markets, the primary sector and energy. He joined the Herald in 2011.<\/p>\n
Stay ahead with the latest market moves, corporate updates, and economic insights by subscribing to our Business newsletter \u2013 your essential weekly round-up of all the business news you need.<\/p>\n","protected":false},"excerpt":{"rendered":"Fonterra chief executive Miles Hurrell said Fonterra had been able to make changes based on recent improvements in…\n","protected":false},"author":2,"featured_media":294194,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[17767,162484,1443,95,9344,2177,9442,18658,138,1288,56717,7224,162485,36354,35958,12967,37258,7226,17766,2082,78,15220,23394,19332,111,139,69,90,3333,48037,1133,6926,1962,14446,3179,1961,55837,23330,102,11587],"class_list":["post-294193","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-42b","tag-162484","tag-about","tag-and","tag-announcement","tag-average","tag-better","tag-bumper","tag-business","tag-capital","tag-combined","tag-dairy","tag-dairynz","tag-dividend","tag-estimates","tag-farmers","tag-farmgate","tag-fonterra","tag-fonterras","tag-for","tag-in","tag-line","tag-mainland","tag-milk","tag-new-zealand","tag-newzealand","tag-nz","tag-on","tag-price","tag-repayment","tag-sale","tag-season","tag-special","tag-stand","tag-thanks","tag-this","tag-upgraded","tag-windfall","tag-with","tag-yesterday"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/294193","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=294193"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/294193\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/294194"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=294193"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=294193"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=294193"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}