The chairman of Fonterra, John Wilson, has confirmed the co-operative is in talks with Argentina's main dairy company, SanCor, over a possible tie up but said discussions were "at a very early stage".
Argentina's two biggest newspapers, La Nacion and Clarín, have been carrying reports that said Fonterra had been in talks with the indebted SanCor, which is also a co-operative.
"SanCor and Fonterra are certainly talking at the moment, but that is all that is occurring," Wilson told the Herald.
"Our management team is talking with different entities globally on a continuing basis - that is the nature of our business," he said.
"Clearly SanCor has had a challenging period and they are having a chat with us at the moment, but it is very early days and nothing is really occurring at all," Wilson said.
In the latest report for La Nacion, the paper quotes Santa Fe Production Minister Luis Contigiani as saying August would be a key month to define the fate of SanCor.
The paper also said a number of auditors were looking at SanCor's accounts for a possible purchase.
The report estimated the likely price tag for SanCor oscillates between US$200m and US$400m. Fonterra already has extensive interests in Latin America.
In Chile, the dairy giant Saprole is Fonterra's oldest offshore investment, and is the best known corporate brand outside of Coca Cola.
Fonterra is also a significant player in the US$26 billion year dairy market in Brazil.
A Bloomberg profile of SanCor described it as a dairy farmers co-operative, engaging in the production and sale of milk-based products in Argentina and internationally.
It offers skim milk powder, natural or salt butter, gouda cheese, edam, and cheddar.
The company was founded in 1938 and is based in Sunchales, Argentina, Bloomberg said.