New Zealand dairy co-op Fonterra has lifted its forecast farmgate milk price as it warned of a risk of further market volatility.

The forecast farmgate milk price midpoint for the 2025/2026 season has increased from NZ$9.00 to $9.50 per kilogramme of milk solids (kgMS).

The co-op has also lifted and narrowed its forecast range from $8.50-$9.50/kgMS to $9.20-$9.80/kgMS.

Fonterra

Miles Hurrell, Fonterra chief executive, said the changes were "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.

"Following the declines at the end of 2025, prices have lifted in the last four Global Dairy Trade (GDT) events.

"As such, we continue to take a balanced approach with our Farmgate Milk Price forecast," he said.

Mainland Group

Hurrell also confirmed that Fonterra intends to pay out 100% of underlying earnings generated by Mainland Group during the current financial year (FY26) while still under Fonterra ownership.

He said 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.

“This remains subject to the settlement date of the transaction and the finalisation of our financial statements and audit process," Hurrell said.

Last October, farmer shareholders in the New Zealand dairy co-op backed plans to sell Fonterra's Mainland Group to French dairy giant Lactalis for NZ$4.22 billion.

Subject to completion of the sale, Fonterra intends to return approximately NZ$3.2 billion of capital to shareholders, this equates to approximately NZ$2 per share.

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.

Hurrell said 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," he said.