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Fonterra Narrows Milk Price Forecast as Weak Demand Weighs on Dairy Markets
New Zealand dairy giant Fonterra on Monday trimmed the upper end of its forecast for the price it pays farmers for milk for the 2026/27 season, signaling pressure from softer global demand and increased supply.
Revised Forecast
Fonterra adjusted its forecast for the farmgate milk price to a range of NZ$8.00 to NZ$10.50 per kilogram of milk solids (kgMS). This narrows the previous forecast of NZ$8.00 to NZ$11.00 per kgMS, which was announced in late May.
The cooperative held its forecast for the current 2025/26 season unchanged at NZ$9.60 to NZ$9.80 per kgMS.
Market Drivers
The revision reflects a downturn in the global dairy market. According to Fonterra, Global Dairy Trade prices have fallen 11% across the key products that determine the farmgate milk price since its last update.
AdThe company attributed the price pressure to two main factors:
- Softer-than-expected demand from key markets.
- Robust milk production from major exporting regions, which has increased global supply.
Outlook and Context
While Fonterra noted a strong start to New Zealand's own milk production season, it identified the El Nino weather pattern as a potential wildcard for global dairy supplies moving forward. The lower forecast directly impacts the revenue expectations for New Zealand's dairy farmers, who are key suppliers to the cooperative.
This adjustment underscores the volatility in global commodity markets, where shifts in international supply and demand can rapidly influence producer prices.