ANZ predicts $10/kg milk price for this season and next

ANZ sees $10/kg milk prices for this season and next. Photo / Supplied

ANZ has upgraded its milk price forecasts to $10/kg of milksolids for this season and next.

For the current season, which ends on May 31, ANZ had been expecting $9.85/kg and was looking at $9/kg for the 2025/26 season.

“Dairy prices have well outperformed expectations of late on constrained global supply,” the bank - New Zealand’s biggest rural lender - said.

“Some of these constraints will persist, but dark clouds over global growth mean it’s reasonable to assume some of this price strength will recede over the year ahead.”

In March, Dairy NZ said the 2025/26 season could be one for the history books if farmgate milk prices stayed around $10/kg for the second time in a row.

If that pans out, dairy‘s contribution to the economy would increase by about $10 billion over two years, compared to previous, more moderate milk price outcomes of around $8.50/kg.

Dairy commodity prices have continued to lift as the season draws to a close.

Fonterra’s milk price forecast for the 2024-25 season is $9.70- $10.30, with a midpoint of $10.00/kg.

“Looking towards next season, the starting point for global dairy prices is much higher than looked likely,” ANZ said.

Dairy prices have outperformed expectations in recent months as tight global supply has seen buyers compete hard for product.

In the last two Global Dairy Trade (GDT) auctions since US President Donald Trump’s “Liberation Day” tariff announcements, dairy prices have shrugged off the global turmoil and lifted further.

At this week’s auction, the GDT price index jumped 4.6% to settle at an average index price of US$4516/tonne.

NZX Dairy said bidding at the auction was “fierce”.

“Results on this occasion exceeded even the NZX dairy team’s and SGX-NZX derivatives market’s own prior bullish expectations,” NZX said in a report.

The upward price momentum was driven by a 59% surge in purchase volume by Southeast Asia Oceania compared to the previous event, overall accounting for 38% of the total quantity sold.

“Currently, the global milk supply picture continues to be soft, with recent milk production data out of Europe showcasing a 2.3% year-on-year decline in February collections, notably by heavyweight producers France and Germany,” NZX said.

“This, combined with the tight product supply both on and off the GDT platform as the NZ dairy season draws to a close, has provided bullish market conditions for processors,” NZX said.

Jamie Gray is an Auckland-based journalist, covering the financial markets, the primary sector and energy. He joined the Herald in 2011.