Chairman Henry van der Heyden said the board had decided to hold earlier forecast milk prices for the 2010-11 season at $6.60 a kg of milk solids (kg/ms) and the share of the profit after tax of between 30c and 50c per share, most likely at the higher end of that range.
This would make the range of the end-of-season payout between $6.90 and $7.10 a kg/ms, still ahead of the expected final payout for the 2009-10 season of between $6.50 and $6.60 a kg/ms.
The payout for last season was made up of an expected milk price of $6.10 and a profit distribution of 40c-50c a kg/ms.
Sir Henry said global dairy markets and the value of the New Zealand dollar were extremely volatile and, despite an easing in prices in recent months, there were signs indicating a potential improvement in prices later this year.
Earlier this month, prices on Fonterra's globalDairyTrade internet auction fell for a fourth successive month to give a cumulative fall of more than 20% over that period.
Sir Henry said if current commodity prices and foreign exchange rates were to continue all season, then he estimated the payout for the coming season would be "marginally" less than the $6.90-$7.10 forecast.
"However, we are holding to the forecast payout of $6.90 to $7.10 as we are seeing signs of potential strengthening of international prices further into the season."
Those signs included drought in Russia prompting the country to stop grain exports to western Europe, and floods in Pakistan and China affecting agricultural production, which could all push up dairy prices.
"The fundamentals for global markets continue to point to balanced supply and demand," chief executive Andrew Ferrier said.
