Falling global dairy prices will hit Fonterra's bottom line when it announces its financial results next week.
The dairy giant has reconfirmed its earnings before interest and tax (ebit) guidance range of between $500 and $600 million, but said expectations were for it to be at the lower end of the range.
That was due mainly to the adjustment to the value of Fonterra's year-end inventory and reflected the significant reduction in prices, with the GlobalDairyTrade price index decreasing 45% since February.
Last year, Fonterra's normalised ebit was $1 billion, down 3% from $1.03 billion the previous year.
It will report this year's financial results next Wednesday.
Forsyth Barr, which has maintained its neutral rating on the Fonterra Shareholders Fund, said the volatile global commodity price movements continued to highlight the short-term earnings-unpredictability challenges investors in the fund must contend with.
Meanwhile, milk collection across New Zealand for the season to August 31 reached 127 million kg ms, which was 5.4% higher than in the same period last season, Fonterra's latest global dairy update said.
North Island collection in August reached 79 million kg ms, three million ahead of August last season, while South Island collection reached 25 million kg ms, which was up 2 million kg ms.
Milk volumes were forecast to grow by 2% to 1616 million kg ms for the 2014-15 season.
Rabobank's latest agribusiness monthly said early spring conditions had been ideal for calving and milk production in most regions.
That had boosted early season milk flows to date, which were now building towards a peak around mid-to-late October.
Forecast milk prices remained under pressure, as commodity price falls had not been offset by any significant easing in the New Zealand dollar.
As export sales volumes increased rapidly over the coming months, without a significant market turnaround, further downward revisions to full-season milk prices were expected.
Last month, Fonterra held its forecast farm-gate milk price for the 2014-15 season at $6, but that is widely tipped to slide further.
Globally, the August announcement of Russia's trade ban on product originating in the EU and elsewhere added fuel to the negative sentiment in the market, the Rabobank report said.
Milk to be processed into cheese destined for Russia would now need to find a home in the EU or on the global market in other product forms.
Rabobank expected additional exportable surplus to overhang the global market through the peak of the production and export sales season in New Zealand and Australia.
In Australia, Murray Goulburn, Australia's largest dairy food company, has been the first processor to revise its full-year forecast for the southern milk region.
It has reduced the forecast payout to $A6 per kg/ms, down from a range of $6.15-$6.30.
