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NZ dollar edges lower after Fonterra cuts 2013 forecast

Published: Tue 28 Aug 2012 05:25 PM
NZ dollar edges lower after Fonterra cuts 2013 forecast
By Paul McBeth
Aug. 28 (BusinessDesk) - The New Zealand dollar slipped after local dairy exporter Fonterra Cooperative Group cut its 2013 forecast payout to farmers, citing falling commodity prices and a strong currency.
The kiwi fell to 80.71 US cents at 5pm in Wellington from 80.81 cents at 8am and 81.05 cents yesterday. The trade-weighted index declined to 72.64 from 72.86 yesterday.
Fonterra, the world's biggest dairy exporter, lowered its forecast for the Farmgate Milk price component to $5.25 per kilogram of milksolids from $5.50/kgms and reduced its forecast for the net profit component to a range of 40-to-50 cents, from 45-to-55 cents per share. The Auckland-based company said the kiwi dollar's strength had eroded recent gains in commodity prices, and while it expects a pick-up in global dairy prices it couldn't predict the strength of that recovery.
"Fonterra was a surprise to us - we didn't expect another change so soon and it's interesting given the amount of volume they’ve been doing," said Tim Kelleher, head of institutional FX sales NZ at ASB Institutional in Auckland. "It's had a bit of a dampener on the kiwi."
Kelleher said the kiwi may head back towards 80 US cents this week with the milk price cut and general unease over Australia's economy after today's weak house sales figure across the Tasman added to pessimism the so-called 'Lucky Country' may come under pressure if demand for its resources from developing economies slows.
Markets are waiting for the central bankers' summit in Jackson Hole, Wyoming that kicks off on Friday, with speeches from Federal Reserve chairman Ben Bernanke and European Central Bank president Mario Draghi the highlights.
The New Zealand dollar declined to 64.66 euro cents from 64.76 cents, and was little changed at 77.92 Australian cents from 77.99 cents. The kiwi fell to 63.37 yen from 63.81 yen and declined to 51.11 British pence from 51.26 pence.
(BusinessDesk)

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