10 Sep 2008

Westpac forecasts $7.10 dairy payout

6:25 pm on 10 September 2008

Westpac expects Fonterra to make a payout of $7.10 a kilogramme of milk solids for the 2008-09 season.

The bank also expects a 9% increase in dairy production.

Fonterra's opening forecast is $7, compared with $7.90 last season.

Westpac senior economist Doug Steel says a tango between commodity prices and the New Zealand dollar could constrain Fonterra's milk payout for the 2008-09 season.

He says the falling New Zealand dollar and a drop in international commodity prices appear to be keeping the payout constant.

He also expects a 9% increase in dairy production this season.

That combined with the milk solids payout means the total income for all dairy farmers should be just under last season's $10 billion.