Derivatives specialist OM Financial said the discount in whole milk powder futures since the last auction suggested a fall was imminent.
However, ASB rural economist Nathan Penny said slight weakness in the market was not enough to change Fonterra’s forecast.
If anything, he said an upward revision was possible to Fonterra’s current forecast of $6.40/kg, perhaps by 10c or more, given the market’s recovery since September, when the forecast was cut from $6.75/kg.
“The market is looking a little soft but we are starting to get to the point where it doesn’t really impact on things too much,” Penny said.
The season ends on May 31 and Fonterra will have already sold the bulk of its production.
Fonterra’s first-half result is also due on Wednesday.
While farmers face the prospect of a reduced dividend as the result of the Danone legal settlement, Penny said farmers would be happy with the current milk price, which makes up about 96 per cent of their income.
In data out today, the Dairy Companies Association said milk production fell 3.9 per cent on a milksolids basis in February. Season-to-date production fell 1.2 per cent and production for the 12 months to February was up 0.5 per cent.
Any claim arising from the information contained on the eDairy News website shall be submitted to the competence of the ordinary courts of the First Judicial District of the Province of Cordoba (Primera Circunscripción Judicial de la Provincia de Cordoba), Republic of Argentina, in the city of Córdoba, excluding any other jurisdiction (Federal jurisdiction is also excluded).
Criteria in the moderation of comments that eDairy News will take into consideration in all its publications.
They will not be considered insults of any kind against anyone,, whether a user, moderator or publisher. Complaints made with the name and surname of the author of the commentary will only be accepted after confirmation by the moderator.
Unsubstantiated and gratuitous destructive criticism or expressions of bad taste, whether offensive, racist or xenophobic.
SPAM, (Insert links to web pages not related to the subject, provide emails, etc...)
Comments that are meaningless with the footnote or the dairy sector.