Fonterra lifts payout forecast boosting farmer shareholder incomes and creating economic windfall. Photo: Lynn Grieveson

New Zealand looks set to get its own economic stimulus package of sorts with upwards of $11.5 billion set to be pumped into the economy as a result of dairy giant Fonterra lifting its payout forecast to its farmer shareholders.

The dairy cooperative now expects to pay between $7.30 and $7.90 per kilogram of milk solids, a 6 percent increase from its prior forecast of $6.90-to-$7.50 per kgMS.

The midpoint of the range, which is used to calculate the final payment, has increased to $7.60 per kgMS.

CEO Miles Hurring has attributed the increase to consistently strong demand for dairy, particularly in recent months, which has driven prices higher.

The whole milk powder prices soared 21 percent in last week’s Global Dairy Trade auction. WMP prices are now at US$4,364, the highest level in seven years.

Meanwhile, the GDT price index, which is used as a benchmark reference, rose 15 percent to an average selling price of US$4,231 a tonne.

“It’s very much a China demand-led story but there is also good demand for New Zealand dairy across South East Asia and the Middle East,” said Hurrell.

Fonterra will release its half-year year earnings result on March 17.

My Food Bag shares list at a discount disappointing investors

Those hoping to be ‘in the money’ on their first day owning My Food Bag shares will be disappointed with the outcome of the first day’s trading after the $1.85 shares opened on Friday at $1.75, traded as low at $1.65 and closed at $1.74, down 6 percent.

Around 5 million shares were traded on its first day representing 2.1 percent of the total number of shares on issue, a relatively low percentage for a new issue where up to 10 percent of shares can sometimes change hands on the first day of trading.

The initial public offer raised $340 million as new investors bought existing shareholders out of the majority of their holdings.

The original shareholders have retained a roughly 25 percent stake between them while Milford Funds, Harbour Asset Management and Investment Services Group have each picked up 18 percent between them. The balance has been acquired by staff, customers and retail investors.

Investors will be keenly awaiting the company’s first financial results as a listed entity for the year ended March which are likely to be released in May.

Markets set to bounce today after US markets push higher

The NZ sharemarket should get a lift today following a strong close on Wall Street on Friday after better-than-expected monthly jobs numbers buoyed investor sentiment. (More below)

Adding to the good news, confirmation over the weekend that the Biden administrations controversial US$1.9 trillion stimulus package has been narrowly passed by the US senate will further cheer investors desperate for some good news after rising bond yields created increased nervousness last week.

However, the question uppermost in investors’ minds right now will be: do you buy the dip or sell the rally? This week is set to test which of those sentiments has the upper hand.

The S&P500 closed last week up 0.8 percent at 3,842 following a 1.9 percent gain on Friday.

The NZX50 went in the opposite direction falling a further 0.4 percent to end the week at 12,180. It was the local markets fifth consecutive losing week.

Across the Tasman, the ASX200 continued to be buoyed by strong commodity prices. It closed up 0.5 percent at 6711.

Oil markets had yet another strong week adding to recent gains. Brent Crude Oil futures were up 8 percent for the week to US$69.55 a barrel, its highest level since January last year.

Gold continued to weaken falling below US$1700 to close at US$1699, a nine-month low.

Bitcoin rebounded from the previous weeks losses finishing up around 12 percent for the week to US$50,800.

The kiwi dollar fell 1 percent last week to 71.63 US cents.

Ports of Auckland profit down 20 percent as continued delays cause frustration

Ports of Auckland is once again on the backfoot differing its first-half dividend payment to its owners Auckland City as the onset of Covid-19 and continued delays in the implementation of its controversial automation project significantly impacted its financial performance in 2020.

The onset of the pandemic has created major congestion and logistics issues at the port frustrating businesses and transport companies alike as well as leading to shortages in a range of building products.

Profit fell almost 20 percent to $13.6 million in the six months to December, down from $17.2m a year earlier, as automation, labour and interest costs continued to weigh on earnings. Revenue fell to $114.2m from $123.2m with container volumes down 12 percent during the comparable period.

Last year the company paid the Auckland Council an annual dividend of $4.9m which was already well down on the prior year’s figure of $18.6m.

The loss of the dividend will only add further pressure to Auckland Council’s already stretched financial situation that has resulted from four Covid related lockdowns since March last year.

Auckland Mayor Phil Goff issued a “please explain” notice to the port in January arising from ongoing delays in its automation project and continued congestion issues.

The port also disclosed a net change in the fair value of equity securities of $4.2m reflecting the reduced value of its 19.9 percent holding in Northland’s Marsden Maritime Holdings, in which it is the second-largest shareholder after the Northland Regional Council.

Last week, its main rival the Port of Tauranga reported after-tax profits of $49.4m, a significantly better result than Ports of Auckland, while pointing out that Auckland’s ongoing underperformance was having a knock-on effect on its business.

US jobs numbers surprise on the upside raising confidence the economy is recovering

The US economy added 379,000 jobs last month, far more than economists had expected, signalling the labour market recovery is finally gaining steam.

The January numbers were also revised sharply higher to 166,000 added jobs versus 49,000 initially reported.

The leisure and hospitality industry added the most jobs in February with 355,000 new positions as some restrictions to stop the spread of Covid-19 were rolled back.

The unemployment rate — which only counts people who are actively seeking jobs and not those who have dropped out of the workforce entirely — fell slightly to 6.2 percent from 6.3 percent in January. It was forecast to stay flat.

Economists agree that the official jobless rate is likely under-reporting how many people are actually unemployed as a result of the pandemic.

America still has 9.5 million fewer jobs than in February last year. While that number is finally going down, millions of workers still have to rely on government help to make ends meet.

China reveals its GDP growth target for 2021

China’s economy shook off the global recession in 2020, and in doing so narrowed the economic gap with the United States. Now it says it plans to pick up the pace this year.

Premier Li Keqiang on Friday announced that China would target growth of more than 6 percent in 2021.

While China emerged from the Covid induced global downturn better than any other major economy, it still only grew 2.3 percent last year.

The new target is more than what China needs to accomplish to get back on track with President Xi Jinping’s long-term goal for the economy to double GDP by 2035.

To achieve this China would need to grow by at least 5 percent this year while maintaining this growth rate for the next decade or so.

The decision to announce a GDP target followed intense debate amongst CCP officials after China last year abandoned the target for the first time in decades as the coronavirus took hold.

Twitters very first tweet goes up for auction

Jack Dorsey appears to be offering to sell the very first tweet as a non-fungible token, or NFT.

The Twitter CEO shared a link last Friday to a platform called “Valuables,” where his March 21, 2006 tweet “just setting up my twttr” was up for bidding. The highest offer is so far is a bid of $2.5 million.

Ownership of these assets is recorded on a blockchain — a digital ledger similar to the networks that underpin bitcoin and other cryptocurrencies. However, unlike most currencies, a person can’t exchange one NFT for another as they would with dollars or other assets. Each NFT is unique and acts as a collector’s item that can’t be duplicated, making them rare by design.

Crypto collectibles have exploded in popularity lately, with anyone from artists to rock bands minting their content.

Some people who are buying NFTs believe it can help them prove ownership of a virtual item thanks to blockchain.

Dorsey has also been an advocate of digital currencies, displaying ”#bitcoin” in his Twitter bio. His digital payments company Square also purchased approximately 3,318 bitcoins in late February, expanding on its October 2020 purchase of 4,709 coins.

Andrew Patterson is Newsroom's Markets Editor and has worked for decades as a financial journalist, radio presenter and editor with Australia's ABC, Radio Live and NBR.

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