Fonterra Co-operative Group has increased the midpoint of its forecast farmgate milk price for the 2026/27 season to NZ$9.50 per kgMS, up from its previous forecast of NZ$9.25 per kgMS. The co-operative said the revision reflects stronger international dairy commodity prices and continued global demand.
The updated midpoint is equivalent to approximately €4.74 per kgMS, compared with the previous estimate of €4.61. Alongside the higher midpoint, Fonterra has also narrowed the forecast range, raising its lower boundary while leaving the upper end unchanged.
| Forecast | Previous | Updated |
|---|---|---|
| Midpoint | NZ$9.25/kgMS | NZ$9.50/kgMS |
| Lower end | NZ$8.00/kgMS | NZ$8.50/kgMS |
| Upper end | NZ$10.50/kgMS | NZ$10.50/kgMS |
Stronger global dairy markets
Fonterra attributed the improved outlook primarily to recent developments in global dairy commodity markets. Results from Global Dairy Trade (GDT) auctions have strengthened since the company’s previous forecast update in July.
Whole milk powder and skim milk powder have been among the products recording stronger auction results. Since these commodities are important components of international dairy trade, changes in their market values can influence expectations for milk prices paid to farmers.
The improved commodity market performance has provided greater support for Fonterra’s expected farmgate returns during the current season. However, the company has maintained the upper end of its forecast at NZ$10.50 per kgMS.
Global demand remains supportive
Fonterra Chief Executive Richard Allen said the higher midpoint was supported by recent commodity-market developments. He also pointed to continued strength in global dairy demand.
According to Allen, the improved outlook is also linked to continued execution across Fonterra’s business-to-business operations. The co-operative supplies dairy ingredients and products to customers in markets around the world, making international demand and commodity prices important factors in its earnings and milk-price outlook.
The updated forecast therefore provides dairy farmers with a stronger expected payout compared with the previous estimate, although the final price will depend on how international markets develop during the remainder of the season.
Cautious approach maintained
Despite the increase, Fonterra has stressed that the outlook remains subject to uncertainty. Allen said geopolitical volatility continues to affect global markets and noted that only two months of the 2026/27 season had been completed when the forecast was revised.
Previous dairy seasons have demonstrated how quickly commodity prices, demand conditions and other market factors can change. As a result, Fonterra has retained a relatively broad forecast range of NZ$8.50 to NZ$10.50 per kgMS.
The unchanged upper boundary indicates that the co-operative continues to see potential for stronger market conditions, while the higher lower boundary reflects the more supportive conditions currently visible in international dairy markets.
For New Zealand dairy farmers, the revised midpoint represents an improvement in the expected farmgate milk price compared with Fonterra’s earlier guidance. The forecast will remain closely watched as the season progresses, particularly as further GDT auctions provide additional signals about international dairy commodity demand and pricing.
With global dairy markets continuing to respond to supply, demand and geopolitical developments, Fonterra’s future forecast updates will provide further indications of how the company’s expectations are evolving for the 2026/27 season.