Unusual weather around the world, including the drought this summer in the US, has led Fonterra CEO Theo Spierings to forecast an increase in global dairy prices in the first half of 2013.
Spierings also pointed to weather events in Europe and South America as he predicted higher prices in the early part of next year.
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“There has been a persistent, serious drought in the United States. That has pushed up the price of grain, which in turn affects dairy production. There are also concerns about drought in the Ukraine and Russia. In South America, extreme wetness in parts of Brazil and Argentina could also depress wheat production,” Spierings said. “Given current global conditions, our forecasting anticipates global dairy prices are likely to move higher in the first half of 2013.”
Fonterra chairman Sir Henry van der Heyden said prices had increased by over 17% on average between August and Fonterra’s most recent GlobalDairyTrade event, where it auctions dairy commodities. “While there was a drop at last week’s GDT event, it has not changed our overall commodity price forecasts,” he said.
The company has upped its forecast for its payout to farmers for the 2012/13 season. It predicted a payout range of NZ$5.90-6.00 for a “fully shared-up farmer”, up 25% on its previous forecast in August.
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