ASB rural economist Nathan Penny was picking $5 for the current season, a 30c improvement on the dairy giant's current forecast of $4.70.
Westpac also has maintained its $5 forecast.
Since Fonterra's last forecast update in December, overall GlobalDairyTrade auction prices had lifted just under 30%, while whole milk powder (New Zealand's key export product) prices had surged 45%, Mr Penny said.
Fonterra's board was due to meet tomorrow and he expected a forecast update was likely on Thursday morning.
Prices had ''turned the corner'' but while the price spike was impressive, it had come at a cost, Mr Penny said.
The strong result followed the drought declaration two weeks ago and the recent rapid slowing in milk production growth.
Generally, farmers had begun to respond to lower global farm-gate milk prices and, in New Zealand they had been prompted further by dry conditions, by slowing their production.
Recent auction results highlighted that global dairy markets remained very sensitive to changes in New Zealand milk supply, he said.
In a weekly commentary yesterday, Westpac economists said even a $5 milk price was very low compared with recent history and would be below break-even for a substantial number of dairy farmers.
However, an upgrade to the payout would help to take some of the financial strain off the industry.
Lincoln University farm management and agribusiness lecturer Bruce Greig warned price volatility in the dairy industry might be ''the new normal'', and prices might fluctuate widely from year-to-year.
The milk price New Zealand farmers received was the result of the demand-and-supply conditions of milk in the international market.
It was a commodity market, which exhibited characteristic fluctuations, he said.
''Dairy farmers may just have to get used to it and implement systems which can cope with these changes,'' he said.
Farmers needed resilient systems which were profitable at high and low milk prices.
The traditional all-grass New Zealand system might be better at low prices but might also fail to capture the full benefit of high prices when they occurred, he said.
