New Zealand dairy co-op Fonterra has increased its farmgate milk price forecast for the 2026/2027 season, with the midpoint rising from NZ$9.50 per kilogramme of milk solids (MS) to NZ$9.75 per kgMS.  

The co-op also lifted and narrowed the forecast range from NZ$8.50-$10.50 per kgMS to NZ$9.00-$10.50 per kgMS. 

Richard Allen, chief executive of Fonterra, said the updated forecast was driven largely by improving demand for whole milk powder (WMP) and skim milk powder (SMP). 

"Over the last two events, our WMP and SMP pricing on Global Dairy Trade (GDT) has increased by about 5% and 7% respectively.

"This is driven by sustained demand from across Southeast Asia, Middle East, Africa and China," he said.

Milk price

Allen added: "We have also had a good start to the season which sees our sales book well-contracted for this stage of the year, despite record milk collections, giving us confidence to lift and narrow the forecast range.  

"There’s plenty more to do, and we are continuing to monitor factors that could affect global supply and demand for dairy".

Fonterra also decided to increase its organic milk price, with the midpoint lifting from NZ$14.30 per kgMS to NZ$15.25 per kgMS, and the range moving from NZ$13.30-$15.30 per kgMS to NZ$14.50-$16.00 per kgMS. 

"Our teams will leverage our scale and flexibility to adapt and make sure we’re capturing the most value for our farmers’ milk," Allen said.

Fonterra

Fonterra recently announced plans to invest NZ$1 billion (€499 million) to expand its protein manufacturing network over the next three years.

As global demand for advanced protein continues to grow, the co-op said the investment on the South Island will also improve Fonterra's environmental performance in terms of emissions and water impact.

The investment, expected to created up to 60 permanent jobs, will allow the co-op to move more milk from whole milk powder and commodities into "high-value products".

The announcement came as Fonterra reported NZ$27 billion in revenue for the 2026 fiscal year (FY26), along with NZ$19.6 in cash returns to farmer shareholders.

Total group reported operating profit was NZ$3.4 billion, up from NZ$1.7 billion last year.

This figure was boosted by NZ$1.2 billion after the co-op's sale of its global consumer and associated businesses, Mainland Group, to French dairy company, Lactalis.