The new forecast was 3.3% lower than the 1584 million kilograms of milk solids collected last season.
The previous forecast, made in December, was also 1584 million kilograms.
While the dairy giant could meet all its current sales commitments, it was planning to reduce the quantity of product offered on the GlobalDairyTrade auction platform and through direct sales channels.
Daily milk production was now 6.1% lower than at the corresponding time last year, as farmers appeared to be using more traditional practices to manage their farm businesses with the low payout forecast, group director co-operative affairs Miles Hurrell said.
Fonterra's current farmgate milk price forecast for 2014-15 is $4.70/kg which, when combined with an estimated dividend range of 25c-35c per share, amounted to a forecast payout of $4.95-$5.05/kg.
While excellent pasture conditions resulted in volumes in the first half of the season being higher than the previous season, the situation had changed significantly this month.
In some regions where pasture quality has declined markedly since mid-January, some farmers were drying off cows early.
There also appeared to be a reduction in feed supplements, as the economics did not support their widespread use this season, Mr Hurrell said.
IrrigationNZ has advised irrigation farmers to ''pull out all the stops'' to ensure they optimise every drop of water as the irrigation season might shut down six weeks earlier than usual in some areas.
Water restrictions were biting home in parts of Canterbury and Otago and shutting down early would affect farmers' ability to maintain winter feed crops, sow new pastures and ensure stock were in ''premium condition'' going into the colder months.
IrrigationNZ project manager Paul Reese said irrigators should ensure their equipment was operating at its optimal level so water was applied as effectively as possible.
Irrigators also needed to be aware of what was happening with their water supply and prepare ahead of further water restrictions to ensure domestic and stock water was still available and that crops could be managed with restricted water supply, he said.
