General News
25 February, 2026
Milk price forecast increased
FONTERRA Co-operative Group Ltd has lifted its forecast farmgate milk price for the 2025/2026 season and narrowed its forecast range.
The midpoint has increased from $9.00 per kilogram of milk solids (kgMS) to $9.50 per kgMS, with the forecast range lifting and narrowing from $8.50-$9.50 per kgMS to $9.20-$9.80 per kgMS.
Chief executive officer Miles Hurrell said the co-op had been able to make these changes based on recent improvements in global commodity prices combined with Fonterra’s well-contracted sales book.
“As we have seen, global dairy prices have been volatile across the season,” he said.
“Following the declines at the end of 2025, prices have lifted in the last four global dairy trade events.
“Global milk production remains above seasonal norms, meaning the risk of further volatility in pricing remains.
“As such, we continue to take a balanced approach with our farmgate milk price forecast.
“Our team is focused on enhancing returns for farmer shareholders through the farmgate milk price and earnings, by delivering on our strategy.”
Fonterra is advising it intends to pay out 100 per cent of underlying earnings generated by mainland group during financial year 2026 (FY26) while still under Fonterra ownership.
The earnings will be distributed through a special mainland dividend payment to shareholders and unit holders following the completion of the sale to Lactalis.
“We are currently finalising our interim accounts and can indicate that we expect the special mainland dividend to be in the range of 14-18 cents per share, which reflects the operating performance of the mainland business during the first half of this year driven by ongoing cost management and favourable input commodity prices,” Mr Hurrell said.
“This remains subject to the settlement date of the transaction and the finalisation of our financial statements and audit process.
“Fonterra’s FY26 forecast earnings guidance from continuing operations remains unchanged at 45-65 cents per share.
“It is intended that Fonterra’s dividend policy will be applied to these continuing earnings.
“Our interim dividend from continuing operations will be confirmed when we release our FY26 interim results and an update on the special mainland dividend will be given at this time.”
As previously indicated, Fonterra expects the transaction to be complete in the first quarter of the 2026 calendar year, subject to separation of the businesses from Fonterra and remaining regulatory approvals being received.
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