Fonterra is expected today to announce a forecast milk price for next season of about $6.10 a kg of milk solids, similar to the final payout expected for the season just ending.
International prices for dairy products have been holding firm, and demand outstripping supply prompted Fonterra late last month to lift this season's forecast milk price by 40c a kg of milk solids to $6.10.
A final figure for the season is still to be announced but commentators do not expect Fonterra's opening forecast for 2010-11 to be lower than the latest forecast for this season, though they have warned of market volatility.
BNZ economist Doug Steel said since Fonterra's April forecast, the world had been rocked by concerns about European debt, China's leaders had tried to slow economic growth and milk production in North America had risen sharply for the second consecutive month.
In addition, the European Union has announced it would start selling the first of the intervention stocks it acquired in the last year as it sought to underpin world prices.
Mr Steel said tenders were being called for 25,000 tonnes of butter and 65,000 tonnes of skim milk powder which, combined with a mixed economic outlook, created some uncertainty.
"Those things temper the enthusiasm for the world dairy market, especially against the backdrop of most commodity prices pedalling back in the last few weeks."
The price of oil, which was linked to dairy prices, had fallen 10% in recent weeks.
On the positive side, Mr Steel said the New Zealand dollar had eased 3c against the United States dollar since Fonterra's April announcement, which he said could push its forecast milk price higher than $6.10 if there was confidence it would stay around present levels.
Fonterra chairman Sir Henry van der Heyden indicated late last month that farmers should have some confidence about improved prices.
"Although a more formal forecast will be done at the end of May, our view is that farmers should budget for a milk price around this year's level."
Fonterra has also announced a distributable profit, or dividend for its shares, in the range of 40c to 50c a share, but it intends keeping 10c to 30c a share as retained earnings.
Chief executive Andrew Ferrier said last monthdemand from the Middle East, Asia and North America was exceeding supply, while new-season production had been slow in Europe and North America.
