Fonterra cuts forecast milk forecast after a ninth straight global dairy trade auction dip
Thursday, 18 December 2025
Fonterra has cut its forecast Farmgate Milk Price for the 2025/26 season after a ninth straight global dairy trade auction dip.
On Thursday, the Co-op adjusted the forecast range from $9-$10 per kilo of milk solids to $8.50 to $9.50 with the midpoint changing from $9.50 per to $9.
Fonterra’s move was no surprise for farmers, who have felt the chill of falling dairy prices after a golden period.
A survey conducted by Westpac-McDermott Miller between December 1 and December 11 and published on Monday showed a drop in spending confidence had hit the dairying regions of Waikato and Canterbury.
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Fonterra chief executive Miles Hurrell said: “With half the season still to complete, we continue to experience strong milk flows both in New Zealand and globally, particularly out of the United States and Europe, and this continues to put downward pressure on global commodity prices.”
That had combined with a stronger New Zealand dollar to force the forecast change.
“We started the season with a wide forecast range of $8 to $11 per kilo of milk solids and the new midpoint of $9 remains within that range,” he said.
ASB said while sheep and beef prices remain high, strong production continues to weigh on dairy prices, which have fallen again in late December.
Ahead of Tuesday’s global dairy trade auction, ASB identified falls in the prices of whole milk powder, skim milk powder, butter, and anhydrous milk fat.
“The pace and magnitude of the price declines across all products over December has been greater than our already pessimistic forecasts that we published in November,” the bank’s team of economists, led by chief economist Nick Tuffley, said.
“Behind the large price drops have been strong production data here and abroad.”
Tuesday’s global dairy trade auction was the ninth straight auction in which prices fell.