(Adds details from Fonterra, background)
Global dairy giant Fonterra Co-operative Group Ltd (FSF), (FCG) maintained its forecast for its payout for the current season on Monday amid continuing global uncertainty.
The world's largest dairy exporter said it would pay its New Zealand farmer shareholders NZ$4.25 ($3.06) per kg of milk solids in the 2016-17 season, unchanged from a prior forecast.
"It is another financially challenging season for farmers," said Fonterra Chairman John Wilson.
Wilson said the price reflected the continuing global uncertainty and the high New Zealand dollar exchange rate, which continued to impact the competitiveness of New Zealand dairy exports.
“The recent weakening of the euro, combined with the continued strength of the New Zealand dollar, has meant a price advantage for European export dairy products," he said.
Fonterra also announced a forecast earnings per share range for the 2017 financial year of 50 to 60 New Zealand cents, making the total payout available to farmers in the 2016-17 season NZ$4.75 to NZ$4.85.
The forecast marks the third year of low payouts and remains below an estimated break-even level of around NZ$5.28.
Until recently, dairy was the backbone of New Zealand's economy, representing around 25 percent of exports. But prices have tumbled by more than half since early 2014, hurt by China's economic slowdown and global oversupply.
Weak dairy prices have put significant pressure on New Zealand farmers. More than 85 percent of dairy farmers were already estimated to be running at a loss.
Looking ahead, Wilson said Fonterra expects global milk supply and demand "to come into balance over the course of this season."
Fonterra continues to forecast a 3 percent reduction in New Zealand milk collection for the current season.
