Fonterra has nudged its forecast farmgate milk price higher for the second time this spring, lifting the midpoint from $9.50 to $9.75 a kilogram of milksolids and tightening the range it expects for the 2026-27 season.

The co-operative told farmer suppliers on Friday 30 October that the forecast range had moved from $8.50 to $10.50 up to $9 to $10.50. The 25 cent lift comes only weeks after the midpoint was raised to $9.50, a move the Herald reported last month.

For Southland suppliers, most of whose milk goes through Fonterra's Edendale plant, every 25 cents on the midpoint flows straight through to the season's income.

Chief executive Richard Allen said the change reflected stronger buying of skim milk powder and whole milk powder. Across the last two Global Dairy Trade auctions, whole milk powder prices rose about 5 per cent and skim milk powder about 7 per cent, with buyers in China, Africa, the Middle East and Southeast Asia.

Allen said the co-operative's sales book was well contracted for this point in the season, even with record milk collections flowing through its plants, and that gave Fonterra the confidence to lift the midpoint and narrow the range.

There is immediate cash in the announcement as well. Fonterra's letter to suppliers lifted the advance rate to $7.55 per kgMS for October milk, which is paid in November, an increase of 20 cents. Advance payments are the monthly instalments farmers receive during the season ahead of final settlement, and a higher advance eases cash flow at a time when many Southland farms are still paying for feed bought during a wet winter and spring.

Organic suppliers also saw their forecast lifted. The organic milk price midpoint rose from $14.30 to $15.25 per kgMS, with the range moving from $13.30 to $15.30 up to $14.50 to $16.

Allen cautioned that there was "plenty more to do" and that Fonterra was watching factors that could shift global supply and demand through the rest of the season.

The move follows a run of firmer dairy auctions through October. RNZ reported on 21 October that dry spring conditions in parts of the country had helped lift prices, while the gap between powder and fat prices continued to widen. Bank economists have already been talking about a $10 milk price for the season.

Fonterra's $9.75 midpoint sits above the $9.69 suppliers banked for last season, which was itself one of the strongest results in the co-operative's history. DairyNZ's chair Tracy Brown noted this week that dairy exports reached a record $28.8 billion in the year to June.

Fonterra reviews the forecast through the season and has not said when the next update will come. The final price for 2026-27 is settled after the season ends in May.