Rabobank is forecasting a robust opening price of $9.50 to $10.00 per kilo of milk solids for the new 2026/2027 dairy season that started on Monday.
The current midpoint farmgate milk price for the 2025/26 season was forecast at $9.70 per kilo of milk solids.
However, RaboResearch senior analyst Emma Higgins said farmers were also facing a margin squeeze due to global disruptions.
“The ongoing closure of the Strait of Hormuz – now approaching its fourth month – is creating conditions reminiscent of past stagflationary shocks. Initial impacts, particularly higher energy prices, are now flowing through into key upstream dairy inputs, including diesel, fertiliser, and industrial goods,” she said.
On the plus side, Higgins said dairy remained well positioned globally.
“New Zealand dairy farmers, I think, are well positioned to ride through the storm. But, the challenge for the 2026/2027 season will be planning for multiple scenarios.”
Meanwhile, dairy production during the closing season was on track to be New Zealand’s largest on record.
Higgins said the anticipated record setting production level will be hard to beat in the upcoming 2026/2027 season.
“The challenge with next season is that there is only so much higher that you can go from a record base and so while production could lift slightly again, the weather risk – particularly with a very strong El Niño being forecast – will be critical in how high that production needle moves,” she said.
Good news for consumers
Emma Higgins said that while commodity prices were still quite elevated particularly for powders off the back of the high-protein boom globally, milk fat prices have been melting this year.
“So the good news for consumers is that we might see some price relief emerge more clearly across the retail aisles, as we continue to see those weaker fat prices move through the supply chain,” she said.
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