Fonterra has upped its farmgate milk price forecast for this season, as milk supply weakens and demand improves. The farmgate milk price forecast is now at $6.50 and $8 per kilogram of milk solids with the midpoint at $7.25 per kgMS. The increase brings the forecast closer to DairyNZ’s estimated breakeven milk price of $7.78 per kgMS. Fonterra chief executive Miles Hurrell says the improved outlook reflects both supply and demand dynamics. He says they’re forecasting collections to be slightly below last season, while on the demand side, increases in recent Global Dairy Trade events are encouraging but it is not yet clear whether the stronger demand from China will be sustained. Fonterra’s milk collection so far this season is 2.2% behind last season as farmers pull back production in response to weaker milk prices and elevated costs. The season started in June and and peaks later this month.