NZ's Fonterra cuts farmer payout forecast as prices tumble

WELLINGTON, July 29 Tue Jul 29, 2014 12:34am EDT

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WELLINGTON, July 29 (Reuters) - New Zealand dairy giant Fonterra Ltd cut its forecast payout to its suppliers in the new season by 14 percent because of tumbling world prices and a high exchange rate.

The world's largest dairy exporter, also New Zealand's largest company, said on Tuesday it was reducing its 2014/15 payout price to NZ$6.00 ($5.12) a kilo of milk solids from an initial forecast of NZ$7.00 made in May.

Fonterra said it was expecting a dividend from its consumer operations of 20 to NZ cents.

It said a fall in dairy prices, down 34 percent in Fonterra's global auctions since February, a fall in demand, and the high New Zealand dollar were behind the cut.

Fonterra paid out a record NZ$8.40 per kilo in the 2013/14 season on the back of surging demand from China, which drove prices higher.

($1 = 1.1727 New Zealand Dollars) (Reporting by Gyles Beckford; Editing by Stephen Coates)