Fonterra trims its milk payout forecast
Fonterra has lowered its milk payout forecast for the 2026/2027 season due to softer global demand and increased supply. The cooperative cited falling dairy commodity prices and potential El Niño weather impacts as contributing factors.
Why it matters
Fluctuations in dairy payouts significantly impact the agricultural economy and the financial stability of farming businesses.
Fonterra has cut its 2026/2027 milk payout forecast by -50c/kgMS or -5.1%.
CEO Richard Allen says the reduction reflects softer-than-expected demand at a time of strong global supply.
The revised forecast is $9.25 per kgMS, with a new range of $8.00 - $10.50 per kgMS. This is down from the opening forecast of $9.75 per kgMS announced in May, when the Co-operative started with a wide range of $8.00 - $11.00 per kgMS.
“GDT prices have fallen 11% across the reference products that inform the Farmgate Milk Price since we announced the opening forecast in late May, while milk production from key exporting regions is up on last year, said Allen. "We’re expecting a strong [volume] start to the season in New Zealand, noting the potential for the El Niño weather pattern to impact global supply as the season progresses.”
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