New Zealand dairy co-operative Fonterra has increased the midpoint of its 2026–27 season farmgate milk price forecast by NZ$0.25 to NZ$9.75 per kilogram of milk solids (kgMS), providing a positive outlook for its farmer shareholders. The co-operative has also raised and narrowed its forecast range, moving it from NZ$8.50–NZ$10.50/kgMS to NZ$9.00–NZ$10.50/kgMS.
The revision reflects improving global demand for dairy commodities, particularly Whole Milk Powder (WMP) and Skim Milk Powder (SMP). Stronger prices for these products, alongside a positive start to the season and well-contracted sales, have supported Fonterra’s decision to lift its forecast.
Stronger Global Dairy Trade Prices Support Revision
Fonterra Chief Executive Richard Allen said the updated forecast was largely driven by improved demand for WMP and SMP. Prices for the two products increased by approximately 5% and 7%, respectively, across the previous two Global Dairy Trade (GDT) events.
Demand has remained sustained across Southeast Asia, the Middle East, Africa and China. These markets are important destinations for internationally traded dairy commodities, making their purchasing activity a significant factor in global milk powder prices.
Whole Milk Powder is a major product in international dairy trade, while Skim Milk Powder is widely used in food manufacturing and dairy ingredient applications. Higher prices for both products can improve the value Fonterra captures from processing and marketing farmers’ milk.
Record Milk Collections and Contracted Sales Provide Confidence
Fonterra has also reported a strong start to the current season, with milk collections reaching record levels. Despite the higher volume of milk being collected, the co-operative’s sales book is well-contracted for this stage of the season.
This combination of stronger commodity demand, improved pricing and forward sales coverage has given the co-operative greater confidence to increase the forecast midpoint and tighten the lower end of its price range.
However, Fonterra continues to monitor factors that could influence global dairy supply and demand. Changes in milk production, weather conditions, international purchasing activity and commodity market prices can all affect the returns available to dairy farmers.
The updated forecast therefore offers a more positive outlook, while remaining subject to market developments throughout the season.
Organic Milk Price Forecast Also Increased
Alongside the conventional farmgate milk price revision, Fonterra has increased its organic milk price forecast.
The organic milk price midpoint has risen from NZ$14.30/kgMS to NZ$15.25/kgMS. Its forecast range has also moved upward, from NZ$13.30–NZ$15.30/kgMS to NZ$14.50–NZ$16.00/kgMS.
The increase reflects a stronger forecast return for organic milk producers within Fonterra’s supply network. Organic dairy production operates under additional production and certification requirements, and its pricing is influenced by demand and market conditions for organic dairy products.
Global Dairy Demand Remains a Key Market Indicator
Fonterra’s latest revision highlights the influence of international dairy commodity markets on farmgate milk prices. As a major exporter of dairy products, New Zealand’s dairy sector is closely connected to purchasing trends across Asia, the Middle East and other global markets.
Improving demand for milk powders can support export returns and strengthen the value generated from farmers’ milk. However, sustained price performance will depend on the balance between global production, export availability, inventory levels and buyer demand.
Fonterra Chief Executive Richard Allen said the co-operative would continue using its scale and operational flexibility to capture the highest possible value from farmers’ milk.
The latest forecast adjustment provides a positive signal for Fonterra suppliers, with both conventional and organic milk price expectations moving higher. The coming months will show whether global demand and commodity pricing can maintain the momentum supporting the revised outlook.