Murray Goulburn has announced a revised forecast Full Year 2016/17 Actual Weighted Average Southern Milk Region Farmgate Milk Price of $4.70 per kilogram of milk solids (kgms) from $4.88 (kgms) with the forecast remaining subject to seasonal conditions, commodity prices and foreign exchange not deteriorating- Very wet climatic conditions now a major impact on milk intake – Southern Milk Region (SMR) expected to be approximately 2.7 billion litres in FY17
- Murray Goulburn Co-operative Co. Limited (MG) forecast FY17 NPAT of $42 million will now be lower given revised expectations for milk intake
A number of initiatives have been put in place to protect returns, however given unexpectedly wet climatic conditions in recent weeks, MG will not be providing specific profit guidance for FY17 at this stage.
Milk intake now expected to be substantially lower in FY17
With the South Eastern dairy industry approaching traditional peak production, MG now has better clarity regarding the anticipated milk intake for FY17. MG now expects milk intake for FY17 to be approximately 20 percent lower than FY16. This reduction in milk intake is driven by two factors:
- Milk losses: Net milk losses are now approximately 350 million litres, representing approximately 10 percent of FY16 production. Retirements from the industry represent approximately 80 million litres, with the balance being supplier departures to other processors.
- On farm production to reduce due to very wet conditions: MG now expects production from the co- operative’s approximately 2,200 suppliers to be 10 to 12 percent lower in FY17 – broadly in-line with results to date for FY17 production across the South Eastern dairy industry2. Climatic conditions have quickly turned from very favourable settings in August, and are now a significant headwind for milk production. All regions are impacted, in particular the North and West of Victoria, where widespread flooding has impacted dairy herds and pastures.
Interim Chief Executive Officer, David Mallinson, said: “Until recently, there was confidence that spring rainfall was positioning the industry for an excellent season. However unexpected continual rainfall since mid-September following the step-up announcement on 13 September 2016 has created a major challenge for our suppliers and industry. Production across South Eastern Australia was down 10.7 percent in August, and this trend has continued to date. In particular, the North of Victoria has moved from drought like conditions in FY16 to severe wet conditions, with production from that region down 16.9 percent August year to date2.”
