Fonterra Co-operative Group, New Zealand's biggest company, said on Wednesday that commodity prices were forecast to fall in the future, though demand for the company's dairy products would remain steady.
Fonterra, the world's biggest dairy exporter, also said that sales in the United States had topped US $1 billion for the first time. It added that overall sales for June and July were looking strong, which would put the firm in a good inventory position for when the new production season began. It had said in May that a weaker price forecast would be offset by a steady fall in the New Zealand dollar this year.
The kiwi has fallen almost 11 percent against the US dollar since January 1, and is 18 percent below the post-float high of $0.7465 reached in March last year. In April, Fonterra raised its forecast for the current season's payout by 1.7 percent to NZ$4.07 a kilo. Last season the final payout was NZ$4.59. It also said it expected to pay NZ$4.05 for a kilogram of milk solids in the new season from October.
The company's outlook for prices echoed ANZ Bank's findings that New Zealand's main commodity prices had eased for the first time in three months, and further declines were expected given they are still at relatively high levels.
The bank's World Commodity Price Index, published earlier on Wednesday, fell 0.9 percent last month, following a steep 2.4 percent rise in May and a 1.6 percent gain in April. ANZ economist Steve Edwards said the index was only 3.6 percent below multi-year peaks reached last year and further falls were expected. Fonterra is owned by more than 12,000 farmer shareholders and generates around 20 percent of New Zealand's exports and 7 percent of the country's gross domestic product.