Milk Glut Drags Fonterra Forecast Down to $9.20/kgMS
A milk glut around the world shows no sign of easing, putting downward pressure on farmgate milk prices for the next few months.
The GDT price index has risen over 18% this year, wiping out some of the losses from last year.
The whole milk powder price is now sitting at US$3,706/metric tonne, its highest mark since September last year.
NZX dairy analyst Lewis Hoggard notes that skim milk powder (SMP) and butter continue to drag dairy prices upwards. In last week's auction, the butter price jumped 10% while SMP rose 3% and is sitting at a three-year high price of US$2,973/MT.
"SMP has been the most talked about commodity as of late, given significant volatility to start 2026," he says.
The latest rise in GDT prices makes a $9.50/kgMS milk price this season a near certainty.
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Major banks have revised their forecast milk price for the season upwards.
Fonterra's latest forecast range is $8.50 to $9.50/kgMS, with a mid-point of $9/kgMS.
BNZ senior economist Doug Steel says that if prices were to remain around current levels for the remainder of the season, a 2025-26 milk price a touch above the top of Fonterra's forecast range is possible.
Steel says BNZ's forecast of $9.50 builds in some GDT price decline into season's end.
