ANZ Raises Milk Price Forecast Amidst Global Dairy Market Fluctuations
ANZ New Zealand has revised its farmgate milk price forecast for the current season to $9.50 per kg of milksolids. This new forecast is 50 cents higher than the previous estimate of $8.90 per kg and exceeds Fonterra’s latest forecast, which ranges from $8.50 to $9.50 per kg with a $9 midpoint.
The adjustment comes as global dairy prices have experienced a strong rebound in early 2026, following a sharp decline towards the end of the previous year. ANZ agricultural economist Matt Dilly noted that despite unchanged global supply and demand fundamentals, the recent price bounce significantly improved the milk price forecast. NZX dairy futures have also shown strong performance, further influencing the forecast.
Looking forward to the 2026/27 season, ANZ's initial forecast is set at $8.70 per kg, operating under the assumption that dairy prices will decline as current market momentum wanes and global supply pressures re-emerge. Dilly highlighted that milk production is increasing in key markets, driven by high prices and low feed costs, a trend anticipated since 2024 but previously impacted by adverse weather and animal diseases.
Fonterra, a leading dairy cooperative, recently agreed to sell its consumer arm, Mainland, to the French dairy company Lactalis for $4.22 billion. The sale, expected to conclude in the first quarter of this year, will provide a $2 per share capital return to farmers, totaling approximately $3.2 billion. This financial windfall, along with Fonterra’s interim dividend and firm milk prices, offers significant economic benefits to farmers.
The market's reaction to the increased milk production in late 2025 may have been exaggerated, resulting in an overshoot of price declines. However, current price levels are seen as more realistic, providing assurance to dairy farmers regarding income stability for the season.
