Westpac is the latest bank to lower its 2023/24 milk price forecast. The back has cut it back by 75 cents to $6.75/kg which would be the lowest milk price since the 2018/19 season at $6.35/kg. But more pertinently, it would be the lowest in inflation-adjusted terms since the 2015/16 season $3.90/kg. Westpac Senior Agri Economist Nathan Penny says the key driver of the weak short-term price outlook is weak Chinese demand, noting that China is comfortably our largest dairy market. DairyNZ’s updated breakeven milk price estimate is around $7.50/kg. But he says the recent payout from the sale of Fonterra’s sale of its Chilean business has added $0.50/kg back into Fonterra farmers’ cashflows and Fonterra is set to pay a relatively healthy dividend in October of circa 40 cents per share. On-farm input inflation was running as hot as 17% in the middle of last year but now annual input inflation has fallen to 7% and by the end of the year could be in the the 3% to 4% range.