Fonterra's listed Fonterra Shareholder Fund (FSF) units continue to hover just above their all-time low, but surged after Fonterra gave dividend guidance with yesterday's payout announcement.
Before Fonterra slashed its forecast payout yesterday, the FSF units were trading at $4.69, then spiked more than 6% to hit $4.95.
At the $4.66 opening price yesterday the units were down 22.3%, or $1.34, on a year ago, but against their early 2013 high of $8.09, they were down 42%.
They briefly touched an all-time low of $4.60 per unit in mid-June.
The units are based on Fonterra's branded product sales as opposed to farm-gate milk production, and are the only tradeable dairy-linked shares available to the general public.
Craigs Investment Partners broker Peter McIntyre said that in theory, the branded products of FSF should show an improved profit margin when the price of milk, the raw ingredient, was low.
He said the 6% gain after the announcement was the investors' response to Fonterra offering some surety over the future dividend.
He said investors, including institutionals, were still unsure how much more volatility was in the overall commodities market, despite it recently hitting lows not seen since 2002.
''Non-farmer shareholders [of SFS units] are heading elsewhere, to other equities with more assurance of a dividend,'' he said.
While farmers have their own, non-public, Trading Among Farmers shares, some would also have SFS units.
Mr McIntyre said there was a perception that Fonterra was using dividends that should have been tagged for the FSF units to instead go towards farmer payouts.
He also highlighted that the dairy sector was ''far more fragmented'' than when Fonterra first established itself, with farmers able to switch to a growing number of processors.
Mr McIntyre said global dairy trade auction prices correlated closely to oil price trends, reflecting increased imports of both commodities in better times, but oil was at present still trending down.
Because of oversupply, there was subsequently a ''glut'' of both oil and dairy products around the world, Mr McIntyre said.
