Fonterra has lifted its forecast farmgate milk price for the current season to a midpoint of $9.75 per kilogram of milk solids.

The previous midpoint was $9.50 ahead of the 25 cents lift, announced on Friday. 

The dairy co-operative has also upped and narrowed the forecast range from $8.50 - $10.50 per kgMS to $9.00 - $10.50 per kgMS.

Chief executive Richard Allen said the increase for the current season is driven by improving demand for whole milk powder and skim milk powder.

"Over the last two events, our WMP and SMP pricing on Global Dairy Trade has increased by about 5 percent and 7 percent, respectively. This is driven by sustained demand from across Southeast Asia, Middle East, Africa and China.

"We have also had a good start to the season which sees our sales book well-contracted for this stage of the year, despite record milk collections, giving us confidence to lift and narrow the forecast range.

"There's plenty more to do, and we are continuing to monitor factors that could affect global supply and demand for dairy."

In a letter to farmer suppliers, Fonterra said it was increasing its regular advance payments to reflect the higher forecast milk price.

The advance rate for October milk, paid in November, would rise 20 cents to $7.55 per kgMS.

Prices would also increase for Fonterra's organic farmers.

The dairy giant on Friday raised the Organic Milk Price, with the midpoint lifting from $14.30 per kgMS to $15.25 per kgMS, and the range moving from $13.30 - $15.30 per kgMS to $14.50 - $16.00 per kgMS.