Fonterra's opposite number in Australia, Murray Goulburn, has cut its milk price forecast and is looking at a 20 per cent fall in production, which it partly put down to unusually wet weather, this year.

The co-operative - Australia's biggest dairy company - said in a statement to the Australian Stock Exchange that it would suspend its so-called milk supply support package, a three-year loan programme it offered in the wake of retrospective price cuts earlier in the year.

Murray Goulburn said "very wet climatic conditions" in south east Australia would mean a cut in its milk intake by 2.7 billion litres this financial year. In New Zealand, Fonterra said this month that it was also facing lower production because of the wet weather.

The Australian co-operative had forecast a $42 million after tax profit for the 2016-17 financial year, but said in the statement said that its profit would "now be lower given revised expectations for milk intake". The company reported a A$40.6m net profit for 2015/6.

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The company also lowered its forecast milk to A$4.70 from A$4.88 a kg - below the A$5.00 a kg that is generally regarded as break even.

"Climatic conditions have quickly turned from very favourable settings in August, and are now a significant headwind for milk production," it said.

"All regions are impacted, in particular the North and West of Victoria, where widespread flooding has impacted dairy herds and pastures," the company said.

The company said it was continuing to work with industry stakeholders to ensure our supplier base and industry are taking appropriate action to address these conditions.

Murray Goulburn is Australia's largest dairy foods companies and one of Australia's largest food and beverage companies with annual turnover of about $2.8 billion. The co-op has about 2,200 supplier shareholders.

The co-op's units, which trade on the ASX, were quoted at A$1.15 - down four cents from Wednesday's close.

Fonterra this month said wet weather had taken a heavy and "highly unusual" toll on Fonterra's milk production as the season heads towards its peak.

"These decreases have been made in response to significant reductions in daily milk
volumes across the central and upper North Island in October, particularly the key dairying region of Waikato where early October daily milk volumes have been down around 10 per cent versus the same time in the 2015/16 season," Fonterra said.