New Zealand dairy giant Fonterra has announced a forecast payout for the 2005 season of NZ$3.50 kg/ms (US$2.26) with likely variability of 5% up or down.

The forecast compares with Fonterra’s payout of $3.60 in 2003 and its forecast payout for 2004 of $4.15 which was reiterated today [Friday].

Chairman Henry van der Heyden commented: “It’s early days yet with our budgets for 2005 not finalised and our forecast 2005 exposures not yet fully hedged. However we are in a position now to give farmers an indication of where we see the range. We will be in a position to firm that up as we finalise budgets in April. What our farmers have now is more certainty around this season and an early estimate of next season’s payout and the likely variability.”

Heyden said Fonterra had consistently signalled since last year that the weaker US dollar would have a major impact on payout next season. The forecast gave farmers a very early estimate of that impact. A specific figure was premature, given that 2005 exposures were not yet fully hedged. Commodity prices are just as influential as exchange rates, he stressed.

Fonterra will announce its advance rate for the 2005 season at the end of April.