Fonterra has stuck with its $4.70 per kg farmgate milk price forecast for the 2014/15 season and its forecast cash payout of $4.95 - $5.05 a kg.
The cooperative, the world's biggest divesified milk processor, said that although dairy commodity prices had gone up, the increase was not sufficient to raise the forecast milk price.
The last five GlobalDairyTrade (GDT) auctions have shown price improvements after prices dropped by 50 per cent last year.
"Since December, GDT prices for whole milk powder have increased 45 per cent and skim milk powder prices have increased 13 per cent," chairman Jon Wilson said in a statement.
"There continues to be significant volatility in international commodity prices," he said.
"New Zealand volumes are down, with continued uncertainty in milk production due to climatic conditions in New Zealand with droughts in Canterbury, Marlborough, Central Otago and North Otago," he said.
Wilson said Fonterra was advising farmers to continue to be cautious with their budgeting.
At $4.70 per kg of milksolids, prices remain well below the estimated $5 per kg average cost of production.
New Zealand is the world's largest exporter of dairy commodities, representing about one third of international dairy trade each year.
Fonterra will provide a full business update when it reports its first half result on March 25.
- Jamie Gray, agriculture editor
