MENU

Dairy producers benefit from falling Aussie dollar

An interview with Ms Judith Swales, the new Australian head of New Zealand-based dairy co-operative Fonterra (ASX: FSF), conducted by the Australian Financial Review has highlighted that even though the dairy industry has undergone substantial rationalisation over the past decade, there is still excess capacity within the industry.

While excess capacity issues will no doubt need to be tackled, the capacity issue doesn’t appear to be hurting the share price of a number of the major listed players. This is likely explained by the falling Australian dollar, which is providing significant benefits to dairy exporters. A lower dollar makes our export products more competitive in international markets.

Since its listing in December 2012, Fonterra’s share price is up 21%; over the same time period the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) is up about 8%. Bega Cheese (ASX: BGA) has also performed well, with its share price up 33%, while Freedom Foods (ASX: FNP), which has a shareholding in the successful A2 Milk brand, has blitzed the index with its share price climbing 167% since December.

Foolish takeaway

Companies exposed to a falling Australian dollar continue to perform well. With expectations by many economists that the dollar could fall further, agricultural-exposed companies are one area that savvy investors are focusing on.

The Australian Financial Review says “good quality Australian shares that have a long history of paying dividends are a real alternative to a term deposit.” Get “3 Stocks for the Great Dividend Boom” in our special FREE report. Click here now to find out the names, stock symbols, and full research for our three favourite income ideas, all completely free!

More reading


Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.

The 5 mining stocks we’re recommending in 2019…

For decades, Australian mining companies have minted money for individual investors like you and me. But if you believe the pundits and talking heads on TV, those days are long gone. Finito! Behind us forever…

We say nothing could be further from the truth. To earn the really massive returns, you’ve got to fish where others aren’t fishing—and the mining sector could be primed for a resurgence. That’s why top Motley Fool analysts just revealed their exciting new research on 5 ASX miners they believe could help you profit in 2019 and beyond…

Including:

The best way we see to play the global zinc shortage… Our #1 favourite large-cap miner (hint: it’s not BHP)… one early-stage gold miner we think could hit the motherlode… Plus two more surprising companies you probably haven’t heard of yet!

For free access to our brand-new research, simply click here or the link below. But be warned, this research is available free for a limited time only, and we reserve the right to withdraw it at any time.

Click here for your FREE report!