Fonterra payout hope

Fonterra may be able to do better than its forecast of a farmer payout of $4.05/kg milksolids for the current season, according to Goldman Sachs JBWere economist Shamubeel Eaqub.

He estimated Fonterra's payout for the current year would instead be between $4.25/kg and $4.50/kg.

The company last week announced a final payout for the 2006 season of $4.10/kg, up 3c/kg from its most recent forecast, but still markedly down on its payout of $4.59/kg in the 2005 season.

Eaqub said the outlook for the rest on the current season was "reasonably favourable".

Although international dairy prices had been moderating, he believed further falls would be limited in the rest of the financial year.

Eaqub said the exchange rate for the New Zealand dollar was also likely to depreciate over the rest of the season.