New Zealand dairy group Fonterra predicts revival in milk price in 2016
The world’s largest milk exporter, Fonterra has laid off 835 staff globally in the past year, citing a sharp fall in dairy prices due to a slowing economy in China and global oversupply of milk.
Fonterra chairman John Wilson said: “There’s an expectation that dairy prices will move up through the first half of 2016.
"We expect it to start moving up over the coming months.”
Mr Wilson’s views concur with analysis by industry commentaries issued by Danone and Rabobank.
He expects New Zealand’s milk output to fall at least 5% in the coming months.
Fonterra revealed a drop of 4.2% to 222.5kg of milk solids in its own collections in October, the peak month for New Zealand output.
The cumulative total for the season, which started in June, was 527.9kg of milk solids, a drop of 4.8%.
Fonterra also plans to expand its presence in China, which imports about a quarter of all of New Zealand’s total dairy exports.
The company plans to continue investing in China as part of its growth amibtions.
Earlier this year Fonterra raised 1bn yuan ($157m) in dim sum debt, bonds issued outside of China but denominated in yuan, to help fund its investment in Beingmate Baby and Child Food.
“It’s natural for us to raise renminbi [yuan] funds to match those businesses,” Fonterra director Simon Till told Reuters reporters at the UBS Australasia conference in Sydney.
