A high milk price offsetting below-target production has allowed South American dairy farmer New Zealand Farming Systems Uruguay to reaffirm earlier financial guidelines of an expected full-year loss on earnings before interest and tax of up to $NZ14 million.
That February forecast was based on a season-average milk price of NZ36c a litre (US25c a litre), but in a market guidance issued yesterday, New Zealand Farming Systems Uruguay (NZFSU) said the current milk price was NZ50c a litre ($NZ6.50 a kg of milk solids), which would more than compensate for milk production 10% to 15% lower than forecast.
"Milk production for this year is expected to achieve more than 50% growth over the previous year (which was hit by drought), although it is expected to fall short of the previous 80 million-litre forecast, issued in February, by between 10% and 15%."
In a report to the New Zealand Stock Exchange, company management said the shortfall was due to more cows than expected failing to get in calf and a hangover of cows which calved in spring, but were in light condition following last year's drought.
Light conditioned cows were being dried off earlier than normal to allow body condition to be built up for next spring.
Autumn-calving cows, half NZFSU's 6000-cow herd, were in excellent condition and were averaging more than 16 litres a cow a day, well above expectations.
Feed reserves and pasture quality were in abundance going into winter and the price of supplementary feed was low.
"We are in a good position to both sustain strong milk production levels from autumn calvers and to build condition on spring calvers in the lead-up to their calving.
"Our expectation is for substantially improved performance next financial year."
Uruguayan livestock values have also increased, which would be reflected in the accounts.
At mid-May, NZFSU was milking through 29 sheds, but a further two were ready to come into use.
The company has 2000ha under irrigation with a further 1200ha under development using funding from the company's bond issue.
