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Average Price Differentials

CMV v Milk Prices

Aust v NZ Farmgate Prices

Farmgate milk prices for the 2025/26 season (announced in June 2025) for southern Australian milk producers remain under the strong influence of domestic market requirements for fresh milk, natural cheese, cream and fresh dairy foods.

Domestic dairy product prices have improved under the influence of tighter milk supplies in major global exporters to the world market in the past year which has lifted affordable farmgate milk prices.

As a result, the 2025/26 opening prices announced by major manufacturers are around 10% higher than the closing prices last season, while spot commodity product prices have lifted at a much stronger rate.

It’s also important to remember the announced FMP are minimums for the season, with incentives on offer and the possibility of price reviews if global market conditions improve.

The competition for milk at farmgate has increased for the start of the 2025/26 season compared to a year earlier due to dry conditions across southern regions.

Domestic wholesale product prices for cheese and butterfat have been closer to Oceania spot export prices (based on New Zealand quotes).

High EU prices provided a strong underpinning for Oceania butterfat and cheese prices. NZ processors have matched WMP output to available demand, enabling the influence of higher fat and protein values to drive close to a 20% lift in product prices in the year to May 2025. The global SMP market improved with limits on northern hemisphere output, although remains under price pressure due to weak Asian demand, while the NZ butterfat market has benefitted from tight EU supplies.  

The benefit of higher global commodity prices has a lagged effect on domestic product prices due to contract cycles and increased price-sensitivity of Australian consumers in weak economic conditions.

The commodity milk value based on NZ spot export prices remained near A$9.00/kgMS in June, while the Australian CMV averaged A$9.20/kgMS. These compare to the Southern Australian average farmgate prices ranging from $8.90 to $9.20/kgMS for the 2025/26 season.

In New Zealand, Fonterra’s 2025/26 expected milk price has a mid-point equivalent to about A$9.50/kgMS (adjusting for exchange rates and crude protein), about 5% above the milk price paid by Australia’s dairy product manufacturers.

The projected full-season cost of raw milk to dairy product manufacturers with exposure to global markets for SMP and cheese is more sustainable and in line with market returns based on current market outlooks.

Tight milk and cream supplies in the EU market, where milk production has been impacted by animal disease and sustainability pressures, has maintained a strong influence on global markets. Elevated butterfat and cheese prices have supported higher farmgate prices in major EU producers. In the year to May 2025, average farmgate prices were 16% higher than the prior year.

The US market has suffered from weak domestic demand, but limits on herd expansion have kept some tension in farmgate milk prices.

NZ milk prices benefitted from higher WMP prices in the year to June 2025, which averaged 23% above the prior year, while butter prices averaged 13% higher.