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Fonterra chief executive Theo Spierings.
Fonterra chief executive Theo Spierings says dairy exports and imports have been imbalanced for the past 18 months.
He blames this on European production increasing more than expected and lower imports into China and Russia, the two largest importers of dairy.
"The timeframe for a rebalancing has moved out and largely depends on production reducing, particularly in Europe, in response to these unsustainably low global dairy prices. The long term fundamentals for dairy are positive with demand increasing at over 2% a year due to the growing world population, increasing middle classes in Asia, urbanisation and favourable demographics.
"Our forecast is based on no significant changes to either supply or demand globally before the end of the year. However, a reduction in the supply available for export before then could mean prices recover earlier than currently expected," says Spierings.
In a follow-up to this old mutt’s piece two issues ago about Fonterra directors getting to grips with the co-op’s financial state and loudly sharing their dismay in the Koru club, another of the Hound’s spies has passed on more news in the ‘Fonterra director watch’ category.
Fonterra says there’s an urgent need to improve return on capital invested in the co-op by farmers and unit holders.
Fonterra has taken a $126 million hit over the sale of its stake in Venezuelan consumer joint venture, Corporacion Inlaca.
Fonterra is pulling out of a European joint venture as part of its portfolio review following last year’s disastrous financial results.
Fonterra says it has returned to profitability with a net profit of $80m for the first half of the 2019 financial year.
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