Dairy cooperative Fonterra has cut its forecast payout range for the current season by 30 cents, representing a total drop of around NZ$500m (US$374.7m).

The dairy co-operative announced yesterday (22 May) that it had revised down its 2011-12 forecast payout range before retentions to NZ$6.45-NZ$6.55, blaming softening dairy prices on the commodities markets for the fall.

Fonterra also announced a lower opening forecast payout range for the 2012-13 season starting on 1 June of $5.95-$6.05.

This price reflects the board’s “realistic outlook” on the prospects for global dairy markets over the coming season, chairman Sir Henry van der Heyden said.

“There’s a lot of milk out there and prices have softened. We think that supply and demand should move more into balance later in 2012, which may help ease the downward pressure on prices,” he commented.

The GlobalDairyTrade trade-weighted index had declined 20.3% since Fonterra’s last forecast of $6.35 in April, chief executive Theo Spierings added.

Higher global dairy production – particularly in the US, Europe and New Zealand – was pushing down international dairy prices, Spierings said.