Miles Hurrell has defended the co-operative’s decision to put its new season opening forecast at a $8/kg MS midpoint, only to slash it three months later.
The Fonterra CEO said the co-operative made the decision with the best information it had at the time and is operating in a volatile commodity market.
“Our job is to try look through that the best we can and recognise that we are in a market and the markets will move accordingly.”
He said Fonterra’s job is to find the most accurate forecast it can.
Demand was still strong when it set its new season forecast and while some indicators were starting to show that the Chinese economy was starting to weaken, it was “certainly not to the extent that we’re seeing now”, he said.
“Hindsight is wonderful, but at the same time we have to put our best foot forward. We do get asked sometimes why don’t we go more conservative at the start and ramp it up later, but that’s not how we are operating – we’re operating to give the best forecast that we can.”
Hurrell said Fonterra is dealing in a commodity market that is subject to huge volatility and that dairy prices have been relatively stable for the past three to four years.
“You can try and predict the future, but at the same time, we are dealing in a market and buyers and sellers will make their own decisions based on their own economic position on the day.”