26 May 2016

News of higher payout to dairy farmers expected this morning

7:34 am on 26 May 2016

Dairy co-operative Fonterra is expected to announce a higher initial milk payout forecast later this morning.

Most analysts agree on a price of about $4.50 per kg of milk solids for the new season, which starts in a month.

That compares with this season's payout forecast of $3.90 / kg for the company's farmer shareholders.

Analysts say the glut of milk on world markets, caused largely by overproduction in Europe, is expected to shrink, and demand to pick up.

Even with an improved forecast, many dairy farmers are expected to face a third consecutive season when they will struggle to break even.