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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.
OPINION: There is zero chance that someone who joined Fonterra as a lobbyist, then served as a general manager of Fonterra's nutrient management programme, and sat on the board of Export NZ, a division of lobbyist group Business New Zealand, doesn't understand that local butter (and milk and cheese) prices are set by the international commodity price.
Kiwis love their butter, and that's great because New Zealand produces some of the best butter in the world. But when the price of butter goes up, it's tough for some, particularly when many other grocery staples have also gone up and the heat goes on co-operative Fonterra, the country's main butter maker. Here the co-op explains why butter prices are so high right now.
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