Fonterra’s forecast for the current season which ends this month has slipped from $9 per kgMS at the start of the season to a mid point of $8.20 which for some farmers may not cover costs. Westpac senior agri economist Nathan Penny says the jaws have closed on farm margins and therefore profits but he says the increased competition is positive for farmers – particularly in Waikato. Due to a recovering China Nathan Penny is sticking with a $10 forecast for the next season. Prior to Fonterra’s announcement Rabobank opted for the same mid point as the Big Co-op of $8.20 per kilo milk solids. Senior Dairy analyst Emma Higgins says there is good demand from North east Asia the Middle East but China has been sluggish.