Fonterra has lifted its New Zealand forecast farmgate milk price on the back of surging global prices.
The global dairy giant announced the NZ40 cents a kilogram milk solids rise on Thursday.
It takes the forecast price range to NZ$9.30-$NZ9.90/kg MS, with the $NZ9.60/kg MS midpoint a record price for NZ farmers.
The global price surge is being driven by plummeting global supply - particularly in key export regions of NZ and the European Union.
A trickle of price rises has been announced by Australian processors.
Fonterra announced for its Australian suppliers a 20c/kg MS step up to $7.30/kg MS earlier this month.
Australian Dairy Farmers Cooperative announced a step up of 30c/kg MS for its farmers on Thursday.
It follows on from Gippsland milk processor Burra Foods, which announced a 10c/kg MS step up in January, and Bega Cheese, which in December announced a 15c/kg MS step up from January 1, but which applied only for milk supplied from January to June 30.
READ MORE: Global dairy price surge continues
Fonterra CEO Miles Hurrell said the lift in the NZ forecast farmgate price reflected the increase in global dairy prices since the co-op's last milk price update in January.
It also reflected good levels of ongoing global demand for dairy.
"Since we last revised our forecast, average whole milk powder prices on Global Dairy Trade have increased 10.3 per cent, while skim milk powder has increased 8.4pc," he said.
"Both products are key drivers of our milk price.
"Global demand for dairy remains firm, while global milk supply growth continues to track below average levels.
"These demand and supply dynamics are supporting the increase in prices.
"Milk production in the EU and US continues to be impacted by the high cost of feed, and this is not expected to change in the coming months.
"Here at home, ongoing challenging weather conditions have continued to impact grass growing conditions."
The challenging conditions in NZ have seen the co-op cuts its forecast NZ milk production - with it now expecting a 3.8pc fall on last year's production.
"This reduction in supply reinforces our strategic focus on ensuring our milk is going into the highest value products," Mr Hurrell said.
Mr Hurrell said the price forecast would be welcomed by farmers who were facing rising farm costs and rising interest rates.
"Analysis by Statistics New Zealand shows a number of key farm inputs have experienced significant inflation pressure over the past two years, for example electricity costs are up 21pc, while stock grazing costs are up 36.9pc," he said.
Mr Hurrell warned that a number of factors could influence the global market.
"There are a number of factors we are continuing to keep a close eye on, including the potential impact on demand from rising interest rates and inflation, increased potential for volatility as a result of high dairy prices, geopolitical issues and economic disruptions from COVID-19, particularly as governments manage the rapid spread of the Omicron variant," he said.
Want to read more stories like this?
Sign up below to receive our e-newsletter delivered fresh to your email in-box twice a week.