Dairy farmers basking in a windfall season are in for more good news when Fonterra unveils what may be a record opening forecast for next season.
The co-operative will release its third quarter update on Thursday with two key numbers to be released.
Fonterra will report on how the current season’s milk price is shaping up, that’s sitting already at a record midpoint of $10 per kilogram of milk solids ($10/kgMS).
And it will announce the opening farmgate milk price forecast for the 2025-26 season which is tipped to deliver high returns for dairy farmers.
ASB’s general manager of rural banking Aidan Gent said it’s likely to be an incredibly strong forecast.
“Our range goes all the way up to $10.50/kgMS. The spot prices are certainly selling above that so we think there’s a bit of conservatism baked into that.”
Rabobank senior agriculture analyst Emma Higgins has tipped a midpoint of $9.50/kgMS, which relies on the weaker New Zealand dollar.
“Our base case expectation is for an opening farmgate milk price of around $9.50/kgMS for the 2025/26 season, assuming a spot exchange rate of USc 0.59,” Rabobank senior agriculture analyst Emma Higgins said.
“While it’s lower than the NZX futures markets, it would be the highest opening milk price forecast midpoint from Fonterra.”
Rabobank said its opening price prediction allows for seasonal volatility that can occur over the winter months and a wide range allows for any unwelcome commodity price shocks.
“There’s room to see the farmgate price move higher than our prevailing price forecast,” Higgins said.
“This will require dairy markets to maintain current export values over a sustained period.
“Depending on currency capers, the farmgate milk price has upside the bandwidth to edge as high as $10.40-10.90/kgMS by the season’s end – assuming commodity prices remain broadly stable.”
Earlier this month ANZ revised its farmgate opening forecast up to $10/kgMS.
“Dairy prices have outperformed expectations in recent months as tight global supply has seen buyers compete hard for product,” ANZ chief economist Sharon Zollner said.
“Looking forward to next season, the starting point for global dairy prices is much higher than looked likely.”
On the global market, France and Germany have experienced a slowdown in milk production which is driving demand.
Production is starting to pick up in the United States but that follows three years of stagnant supply.
Agriculture Minister Todd McClay said farmers were ending the season on a high, seeing the highest returns since 2021-22 season.
And he agreed all signs point to another strong season ahead.
Dairy prices in the spotlight
Dairy commodity prices have steadily moved higher through 2025 so far, with a broad-based upswing.
According to Rabobank’s recent report, at the end of May 2025 – which coincides with the end of the 2024/25 production season – whole milk powder (WMP) prices (in USD terms) have lifted almost 30 percent higher, compared to the 2024 average WMP price.
Skim milk powder (SMP) prices are nudging USD 3,000/tonne which is 10 percent higher than the 2024 average.
Butter has charged to dizzying record highs in 2025 at prices 16 percent higher than 2024, and 40 percent higher than the 5-year average.
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