Volumes sold were down a little on the previous sale but up on the same sale last year indicating that prices seem to have gained acceptance from buyers especially China. The strength or otherwise of the US dollar may be the biggest influencer in the shorter term. At the moment the NZ$ is around 70.5 US cents, well down from the February high of 74.3 USc.
Fonterra has also confirmed that it has managed to get rid of its China farms. Fonterra has completed the sale of its two wholly owned China farming hubs in Ying and Yutian.
As announced in October 2020, the sale of the farms to Inner Mongolia Youran Dairy was subject to anti-trust clearance and other regulatory approvals in China. These approvals have now been received. The transaction proceeds comprise the original sale price of NZ$513 mln plus NZ$39 mln in settlement adjustments, giving cash proceeds of NZ$552 mln. Fonterra CEO Miles Hurrell said the completion of the sale is an important milestone for Fonterra following its strategic refresh. Perhaps of interest is that shareholder investors seem not to be impressed with the Fonterra share price, with it falling to $4.79 from $4.93 prior to the sale.
Synlait Milk’s latest news release highlighted to impact the fortunes that A2 Milk (ATM) has on the fortunes of the company. At the moment demand for a2 infant formula is ‘uncertain’ and this uncertainty is flowing through to Synlait who are being somewhat circumspect about the financial returns for the remainder of 2021. However, there is nothing to infer that Synlait will not be able to ride out the current problems.
And finally, a footnote to last week; there was some discussion regarding the timber and kiwifruit industry on a report I wrote, and some varying opinion. The kiwifruit situation will run in public shortly and what the options are will be revealed then. The forestry issues are less widely discussed but a worthwhile program to listen to is linked in here. The China actions are arguably quite a rationale but it appears Kiwis are the losers.
Fonterra share price