Expectations range from $8.75 to $10.50/kg milk solids.
Banks and analysts are predicting Fonterra will adopt a conservative approach for its milk price forecast for the new season, with expectations ranging from $8.75-10.50/kg milk solids.
Fonterra will announce the forecast for the 2025-2026 season on May 29 along with its business update for the third financial quarter for 2025.
Rabobank senior agricultural analyst Emma Higgins said she expects Fonterra’s forecast to land around $9.50/kg MS assuming a spot exchange rate of US$0.59.
“While it is lower than the NZX futures markets and spot results would suggest, it would be the highest opening milk price forecast midpoint from Fonterra.”
This is real consideration in the current geopolitical climate, when market-moving headlines are announced almost daily, Higgins said.
There is room to see farmgate price move higher and this will require dairy markets to maintain current export values over a sustained period, allowing for the usual seasonal price weakness through the New Zealand peak.
Depending on currency movement, the farmgate milk price could edge as high as $10.40-10.90/kg MS by the season’s end – assuming commodity prices remain stable, she said.
Global milk supply is set to grow from the combined seven biggest producers through to May 31, 2026.
However, global dairy demand outlook remains cautious, meaning downside risk when forecasting the new season’s forecast, Higgins said.
“Lovers of dairy products are already cost-conscious in some markets, and any significant price hikes on retail shelves or restaurant menus could be met with resistance, with consumers already gravitating towards lower price points and substitution.”
Westpac has the most buoyant outlook, predicting a $10/kg MS midpoint. Westpac industry economist Paul Clark said there was modest upside risk to it, depending in part on how the New Zealand dollar responds to the United States trade war.
Its futures market pricing for next season sits at around $9.75/kg, he said in the bank’s Agri Bites newsletter for May.
ASB’s latest Commodities Weekly newsletter expects a wide new season’s forecast range, predicting $9-$10.50/kg MS, and a “conservative” $9.75/kg MS mid-point.
It said there had been good early signs for next season’s milk price.
NZX dairy analyst Rosalind Crickett also believes Fonterra may take a more conservative approach to the opening forecast, predicting a range of $8.75-$10.25/kg MS.
DairyNZ economist Mark Storey forecast a $10.13/kg MS average payout received for the new season at the organisation’s Dairy Sector Outlook: 2025-26 and beyond event in early May.
This is the income received over the course of the season and calculated using both the previous season’s retro payments as well as advanced payments for the current season and dividends.
The figure was well above his breakeven forecast of $8.57/kg MS. This is the income required to cover costs such as working expenses, interest, drawings and tax.
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