fbpx
Print this page
Wednesday, 27 May 2015 12:09

Westland lifts its prediction for 2015-16

Written by 
Westland chief executive Rod Quin. Westland chief executive Rod Quin.

Westland Milk Products has confirmed its payout for the 2014-15 season will remain unchanged at $4.90 - $5.10/kgMS but its prediction for the 2015-16 is more positive.

Expectations of a price recovery have seen Westland give a forecast price of $5.60 - $6.00/kgMS for the 2015-16 season.

Westland chief executive Rod Quin says the 2015-16 budget represents a balance of many factors. "While it might be more optimistic than some in the New Zealand dairy industry, it is our considered forecast of the expected outcomes for the approaching season."

While Westland expects dairy prices to recover as the 2015-16 season progresses, Quin says they are expected to remain relatively low due to ongoing milk supply pressure from the United States and the European Union. One bright spot is that Chinese whole milk powder buyers are expected to return with more demand in early 2016.

"The reality for the dairy industry," Quin says, "is that we are in uncharted territory, with at least three major changes impacting global dynamics:

1. The removal of EU milk quotas after 30 years, but the retention of their protectionist import duties;

2. Ongoing sanctions against Russia and;

3. Lower demand from China, with high imported stocks overhanging the market and growth in Chinese milk production.

"In any single season, one of these factors would cause major uncertainty. It is the combination of all three occurring within this season, with impacts into 2015-16, that has created global disruption."

Quin says Westland considered all these factors in setting its budget. The company expects prices to start on the road to recovery later in 2015 and Chinese customers to increase demand early in 2016.

"That said, we don't expect large price increases, rather a recovery for milk powders by the end of the season to a figure around US$3000/MT."

He says Westland will commence the 2015-16 season with a higher than usual advance payout of $4.40/kgMS (vs. a traditional approach of $3.85/kgMS ).

"This is based on the expected need for cash required on farms to keep milk production as high as possible, while the company has robust cash flows and manageable working capital headroom."

Westland's increasing move into nutritional products is also a factor in the co-operative's higher predictions for 2015-16, as increasing levels of value-added production drive higher and more sustainable payouts. Included in the budget are the third season of nutritional production from Dryer 6 and the first season of nutritionals from Dryer 7, limited sales from the new UHT plant at Rolleston, and higher returns from Westland's EasiYo subsidiary.

More like this

Wrong again!

OPINION: Remember when the once-crumbling Westland Milk Products company was bought out by Chinese company Yili in 2019 and the howls of outrage and derision from current Minister of Agriculture and West Coast MP Damien O'Connor describing it as a 'sad day' for the West Coast?

Featured

Sheep drench resistance costly

Analysis by Dunedin-based Techion New Zealand shows the cost of undetected drench resistance in sheep has exploded to an estimated $98 million a year.

Dairy sheep and goat turmoil

Dairy sheep and goat farmers are being told to reduce milk supply as processors face a slump in global demand for their products.

Hurry up and slow down!

OPINION: We have good friends from way back who had lived in one of our major cities for many years.

National

Knowing bugs means fewer drugs

A mastitis management company claims to deliver the fastest and most accurate mastitis testing available at scale for New Zealand…

Machinery & Products

AGTEK and ARGO part ways

After 12 years of representing the Landini and McCormick brands in New Zealand, Bay of Plenty-based AGTEK and the brands’…

100 years of Farmall Tractors

Returning after an enforced break, the Wheat and Wheels Rally will take place on the Lauriston -Barhill Road, North-East of…

JD unveils its latest beast

John Deere has unveiled its most powerful tractor ever, with the launch of the all new 9RX Series Tractor line-up…

Biggest Quadtrac coming to NZ!

In the biggest announcement that Case IH Australia/New Zealand has made around its tractor range, its biggest tractor is about…