Predictions In its December 2024 Situation and Outlook for Primary Industries (SOPI),
the Ministry for Primary Industries was already forecasting improvements in the year to 30 June 2025 for milk production, export volumes, and revenue. It predicted a 10% increase in dairy export revenue (to $25.5 billion) and an increase in the all-company average farmgate milk price per kilogram of milksolids (kgMS).
These predictions were based on expected favourable supply and demand dynamics.
Contributing factors underpinning the Ministry’s forecasts included strengthened global demand, tight global supply from key dairy exporting regions such as the US and the EU, higher global dairy prices, and peaks in milk production at home. Expected peaks in NZ’s supply were based on favourable weather conditions, supportive pasture growth conditions, and earlier calving.
Farmgate Milk Price
In its Q3 business update, released on 29 May 2025, Fonterra announced its 2024/25 season forecast Farmgate Milk
The ANZ recently quoted DairyNZ estimates for the breakeven milk price to be $7.51 per kgMS this season, increasing to $8.57 per kgMS next season. The breakeven milk price refers to the income required per kgMS to cover the costs of production.
While the 2025/26 season is set for a strong start, external risks can be expected to impact on profitability. Fonterra and DairyNZ say that the potential for a wider series of outcomes across the season, together with an unpredictable geopolitical situation (with trade tariff tensions, exchange rate fluctuations, and the risk of a US recession) all add uncertainty to global dairy prices.
Earnings on shares
In its Q3 update, Fonterra has reported a 2025/26 normalised profit after tax of $1,158 million (up 11%), normalised continuing earnings per share of 70 cents (up 13%), and an interim dividend of 22 cents per share.
Fonterra’s update reflects the underlying strength and resilience of its core business – milk collections, the forecast Farmgate Milk Price, and earnings performance are all up compared to this time last year.
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