Fonterra Adjusts Milk Price Forecast Amid Supply Increase

Fonterra has revised its forecast for farm gate milk prices, narrowing the range from $9-$11 per kgMS to $9-$10 per kgMS. The cooperative also adjusted the midpoint from $10 per kgMS to $9.50 per kgMS. This change comes as the co-op anticipates an increase in milk collections for the 2025-26 season, raising estimates from 1,525 million kgMS to 1,545 million kgMS.

In a statement, Chief Executive Miles Hurrell highlighted the strong milk flows observed this season, both in New Zealand and other milk-producing nations. “This increase in milk supply has put downward pressure on global commodity prices, with seven consecutive price drops in recent global dairy trade events,” Hurrell noted. The adjustments reflect the impacts of these market dynamics on pricing.

Fonterra initially set a wider forecast range of $8-$11 per kgMS for the season. The revised midpoint of $9.50 per kgMS positions itself centrally within this range, still representing a robust outlook for suppliers.

Hurrell emphasized the cooperative’s commitment to maximizing returns for its farmer shareholders. This focus includes not only the farm gate milk price but also earnings derived from building strong customer relationships and utilizing price risk management tools. “We are dedicated to optimizing our product mix to ensure that we meet our shareholders’ expectations,” he stated.

The adjustments in Fonterra’s forecast are significant for farmers and the broader dairy industry, reflecting both the challenges and opportunities presented by current market conditions. The cooperative continues to navigate the complexities of global supply and demand, ensuring that it remains a competitive player in the international dairy market.