The New Zealand co-operative has updated its Farmgate Milk Price forecast, setting the new benchmark at NZ$9,25 per kilogram of milk solids (kgMS), up from NZ$9,75 announced in May.
At the same time, the expected range was also revised from $8-11 to $8-10,5 per kgMS. This decision follows the decline recorded in the latest Global Dairy Trade (GDT) auctions, which highlighted a weakening in dairy product prices.
According to CEO Richard Allen, the revision reflects weaker-than-expected international demand amid ample supply. Since the initial estimates were released, prices for the GDT benchmark products used to determine the Farmgate Milk Price have declined by a total of 11%.
Also impacting the market outlook is the growth in milk production in the main exporting regions, which is increasing global raw material availability. At the same time, Fonterra expects a positive start to the new production season in New Zealand, while monitoring the effects that the El Niño weather phenomenon could have on global supply in the coming months.
Allen emphasized that the 2026/27 marketing campaign is still in its early stages and that only a limited portion of future sales have been contracted so far. This means the cooperative remains highly exposed to fluctuations in dairy commodity prices.
To face this market phase, Fonterra aims to enhance its operational flexibility, logistics network and consolidated relationships with customers, directing milk towards products and markets capable of guaranteeing the best economic returns for its farmer members.
The company also confirmed its guidance for the 2025/26 financial year. The Farmgate Milk Price remains between NZ$9,60 and NZ$9,80 per kgMS, with a midpoint of NZ$9,70, unchanged from previous guidance.
The updated forecast highlights how the international dairy sector continues to struggle with a delicate balance between supply and demand, in a context where climate dynamics and global price trends remain key factors in the supply chain's profitability.
