The season started with Fonterra sweeping a wide brush in its opening forecast range of $8-$11 a kilogram of milk solids.
This steadily narrowed with the co-op wiping 50c/kg for a new $9/kg midpoint after its range went from $9/kg-$10/kg to $8.50/kg-$9.50/kg on December 18.
Unlikely to be repeated now is the double-digit record $10.16/kg midpoint for the 2024-25 season.
At the time chief executive Miles Hurrell pointed to strong milk flows locally and globally, particularly out of the United States and Europe, continuing to put pressure on global commodity prices.
"There is surplus milk in the world, so that’s obviously put a dampener on any chance of two $10/kg [payouts] in a row. Obviously, farmers who are shareholders will have more than $10/kg because they will have their payout from the sale of the Fonterra brands, but a repeat is very unlikely. More concerning is the fact that the next 2026-27 season was looking down around $8/kg, but the futures market is now drifting that towards the $9/kg mark so we are seeing more stabilisation."
A further forecast before April or May would be unusual as typically Fonterra had a good grasp of its direction.
"But bear in mind they did do quite a big swing to $9/kg which was on the back of GDT auctions, so if there was another big positive one like several weeks ago it might force them to change the figure again. Obviously, they did set it at the $8.50/kg-$9.50/kg range, so we might see that narrow again, but normally that wouldn’t be until May unless there was something to force a correction."
The volatility of extra milk and fast-moving global geo-political changes had made it difficult to pinpoint the final figure.
Overall prices rose 1.5% to an average $US3613 ($NZ6170) a tonne at the last GDT auction on January 20.
This follows a 6.3% gain on January 6 to end a long run of losses going back for nine auctions to August.
Mr Dean said the snapshot indicator for the January 6 auction was about $8.82/kg, so the auctions needed to lift again to increase the seasonal farmgate milk price to the $9.40/kg mark.
He said this was on the right track if GDT carried on trending upwards.
"With the political landscape at the moment we just don’t know what’s going to happen."
That could be seen by a futures market price of $8/kg for the 2026-27 season going back up close to $9/kg within two weeks.
For this season the key indicator got down to $9/kg in late December and by the GDT auction on January 6 returned to close to $9.40/kg.
Mr Dean said most farmers would have budgeted conservatively for about $9/kg because they had been in the industry long enough to know there was seldom two good years in a row.
He said they would be surprised if the payout went below $9/kg because of the amount of milk by now under contract and sold in GDT auctions.
Milk production is up domestically across the country a "couple of percent" with Canterbury grass growth feeling the benefit of rain and cooler temperatures after a slow spring start.
Farmers wonder if global milk supplies might come off the boil next year as US and European farmers struggling with being paid less than their cost of milk production may be tempted to make the most of high beef prices.
Fonterra shareholders are due to be paid out a tax-free return of $2 per share from $3.2b set aside from Fonterra’s sale of its consumer businesses, including Mainland and Anchor brands, to the French dairy giant Lactalis for $4.2b.
This is expected to be delivered over the next few months.
Mr Dean said the average farm with a 400 cow herd and 140,000 shares would probably benefit close to $300,000.
He said much of the money would go towards paying down debt or improving infrastructure on farms.
Sharemilkers missing out on the brand sale payment would see the benefit of investment in farm operations. More farm owners in a better equity position could also take on sharemilkers, he said.
He said farmers would be looking for the co-op to lift returns from new investments to offset the loss of income from the brand sales.
The new South Island recruitment of farmers interested in converting farms to organic milk in Southland and Canterbury for a higher payout was a good example of this, he said.
