Fonterra Trims Top End of Milk Price Forecast on Softer Global Demand

New Zealand dairy giant Fonterra on Monday revised its farmgate milk price forecast for the 2026/27 season, trimming the top end of the range in response to softer-than-expected global demand and rising supply.

Forecast Revision

The world's largest dairy exporter now projects a farmgate milk price 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.

Fonterra stated that its forecast for the current 2025/26 season remains unchanged at NZ$9.60 to NZ$9.80 per kgMS, with a midpoint of NZ$9.70.

Market Drivers

The adjustment reflects mounting pressure on global dairy prices. According to the company, prices for the key products that determine the farmgate milk price have fallen significantly.

Ad

• Global Dairy Trade prices have declined by 11% since Fonterra announced its opening forecast in late May.
• Milk production from key exporting regions is reportedly higher than last year, adding to global supply.

This combination of weaker demand and increased availability has weighed on the outlook for dairy commodity prices.

Outlook and Context

While Fonterra anticipates a robust start to New Zealand’s new season, it identified the El Nino weather pattern as a potential wildcard for global dairy supplies. The farmgate milk price is a crucial economic indicator for New Zealand, as it dictates the income for thousands of farmers and has a significant impact on the country's broader economy.

The revision signals a more cautious outlook for dairy markets heading into the new season, which could affect the profitability of both the cooperative and its farmer suppliers.