Jamie Mackay: The Country host on Fonterra's cautious optimism about the farmgate milk price payout

Fonterra is being cautiously upbeat about the future.

The dairy co-op is forecasting a $10 farmgate milk price payout for the current season, and an earnings range of 65 to 75 cents a share.

The Country's Jamie Mackay explains what this means for the market.

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Episode Transcript

Speaker 1 (00:00):
Jamie mckaye, host of the Countries with us JME got
I hear that how good is Fonterra.

Speaker 2 (00:05):
Pretty damn good, especially if you're a Fonterra farmer. Shareholders
about ten thousand of them around the country, and I
reckon they'll be turning up in Hamilton Heather in a
couple of weeks time and possibly spending up large, especially
when you consider the new tax incentive scheme put in
place in the budget by the government. But getting back
to Fonterra today, look, ten dollars is locked and loaded.

(00:27):
That's the worst world's worst secret for this season, which
we're going to finish on what Saturday night, Sunday morning.
The really interesting number and the most eagerly awaited number
from their Q three update today was the forecast opening
price for the twenty five twenty sixth season, and they
came in at ten dollars, which was probably, I think
above market expectation. Their range is quite wide. They've gone

(00:51):
eight dollars to eleven dollars. Midpoint of that would obviously
be nine point fifty. But Miles Hurrell saying, look, we
see really positive signs despite everything that happening in the
world geo politically out there. So if dairy farmers can
get ten dollars two years in a row, that's great
for them. It's great for the rural economy, and it's
great for New Zealand's economy because they are our biggest business.

(01:13):
The other numbers out there, Heather, the dividend, I mean
they get the milk price that's ten bucks. What will
the dividend be while judging on what Miles Hurrell was
saying on my show that it could be up around
fifty cents. And I looked at the share price today, Heather,
it closed at four dollars sixty four. So if you
get a fifty cent yield on that, that's a fifty

(01:34):
per cent dividend? Should I say that's an eleven percent yearld?
Really interesting in the other one out there that I
threw at Miles Hurle and he kind of duckted to
cover a wee bit. Wouldn't put a number on it.
Obviously it's too early. But when they flag off the
consumer brand's business that's going to be it looks like
quite a windfall for Fonterra shareholders. They might get back
as much as two dollars two dollars per share, so

(01:58):
at four dollars sixty four, take away two dollars. The
Shears don't know them much, but do remember, Heather a
few years ago they were at six bucks. So some
people who bought on a high have got a weep
bit of catching up today.

Speaker 1 (02:08):
Yeah, Pairentop, what are you buying at Peel Days?

Speaker 2 (02:12):
Well nothing really. I was going to say a Queen
Street farmer, Heather, but that's not quite right. I'm a
George Street farmer here in Dunedin. So now look, I
literally turn up there, do my show, do my interviews,
do the client stuff, and then walk out. The only
thing I spend in Hamilton is probably in a bar

(02:34):
later on the evening. It's a very social event.

Speaker 1 (02:36):
How good, Jamie, Thank you as always, it's wonderful to
talk to you. Go well, it's Jamie McKay, Host of
the Country.

Speaker 2 (02:41):
For more from Heather Duplessy Allen Drave, listen live to
News Talks it'd be from four pm weekdays, or follow
the podcast on iHeartRadio.