As global dairy markets gear up for the 2025–26 season, optimism is running high, with Fonterra—one of the world's largest dairy exporters—expected to announce a potentially record-setting opening forecast milk price of up to NZ$10/kgMS on May 29.
Analysts from ANZ and ASB Bank suggest the new season, which officially begins June 1, may replicate or even surpass the strong finish of the outgoing one. ANZ is forecasting a $10/kgMS price, while ASB suggests a slightly conservative $9.75/kgMS.
Persistent Global Supply Constraints Driving Prices
A key driver behind the bullish forecast is the ongoing global dairy supply shortage. Environmental regulations in Europe, profitability challenges in China, and input cost volatility have tightened production capacity worldwide. According to ANZ Chief Economist Sharon Zollner, this has created intense competition among buyers in recent Global Dairy Trade (GDT) auctions, driving prices higher.
“Global dairy prices have outperformed expectations, and with key supply constraints showing no signs of easing, there’s a solid floor under prices as we enter the new season,” says Zollner.
Despite minor fluctuations, GDT prices have remained strong, reinforcing confidence among producers and stakeholders.
Farmer Confidence Up, But Risks Remain
According to Fonterra Co-operative Council Chair John Stevenson, feedback from Fonterra members indicates strong confidence. Farmers have used the favourable milk prices to repay debt, invest in plant maintenance, and pre-book feed, reflecting broader financial stability.
However, Stevenson also warns that volatility remains a reality, especially with geopolitical tensions—such as the US-China trade standoff—looming over global demand forecasts.
“There’s momentum now, but global markets can shift rapidly. Farmers are cautiously optimistic, knowing that final milk prices can be impacted by international developments,” he said.
China’s Role and Trade Uncertainty
As China remains the largest export market for many global dairy players, uncertainty surrounding US-China tariffs continues to cast a shadow. While US dairy exports to China are being impacted, this presents opportunities for other exporters, including India, to explore market share expansion—particularly for specialty and value-added dairy products.
ASB economist Chris Tennent-Brown noted that while the US-China conflict introduces risk, it also allows agile producers like Fonterra—and potentially Indian exporters—to plug supply gaps in Asian markets.
“We may see Fonterra and others seize on export opportunities that emerge from the fallout of tariff wars,” he added.
