Farmer owned-milk cooperative Fonterra said it had revised its payout forecast for the 2011/12 season to $6.75 to 6.85 per kg of milk solids, down 15 cents from is previous forecast, due to declining commodity prices and the stronger New Zealand dollar.
The revised forecast comprises a lower Fonterra farmgate milk price of $6.35 per kg milksolids, down from $6.50.
The season's distributable profit range forecast of $570 to $720 million, equating to 40-50 cents per share, remains unchanged, Fonterra said.
Fonterra chairman Sir Henry van der Heyden said the lower farmgate milk price forecast reflected declining commodity prices and a stronger New Zealand dollar.
Overall, the global dairy trade-weighted was down 5.7 per cent since December 13, when the forecast of $6.50 per kg was announced.
He said the New Zealand dollar's continuing strength, higher levels of global milk production, and uncertainties in international markets led to the board decision to lower the forecast.
Chief executive Theo Spierings said the trend was for stronger global dairy production to continue into this year.
"While we have had a strong start to the season in New Zealand, with record milk flows, we are also seeing higher milk production levels in the US and Europe,'' he said in a statement.
"International milk powder demand, however, currently appears robust, which should help offset the impact of the stronger milk supply growth,'' he said.
Spierings said global markets were reacting to the ongoing economic difficulties in Greece, the potential for conflict in the Middle East, and China's reduced growth forecast. "These events appear to be having a negative influence on most commodity prices.''
He added that commodity prices were likely to remain under some pressure through to mid-2012.
Fonterra will announce its interim results and dividend on March 29.