New Zealand dairy cooperative Fonterra has warned that the developing El Niño weather pattern could affect milk-volume growth toward the end of the 2026/27 season, adding another potential risk to global dairy supply.
Fonterra said El Niño could increase the likelihood of extreme weather events and affect global crop output. The World Meteorological Organization expects the phenomenon to intensify further into 2027, with the potential for severe weather including droughts and typhoons.
The weather risk comes as Fonterra forecasts underlying earnings per share of NZ$0.65–NZ$0.85 for fiscal 2027. The midpoint of the range is slightly above the NZ$0.71 recorded in fiscal 2026, but the company has identified weather-related milk-production disruption as a downside risk to the outlook.
Fonterra’s fiscal 2026 performance was significantly stronger, with profit after tax more than doubling to NZ$2.61 billion. The result was supported by a NZ$1.2 billion gain from the sale of the Mainland Group to Lactalis, along with strong demand for protein-rich products from the company’s Ingredients business.
The cooperative is also responding to rising global demand for protein. Fonterra plans to invest NZ$1 billion over the next three years to expand its protein manufacturing network in New Zealand’s South Island, with the projects expected to create around 50–60 permanent jobs.
Fonterra’s warning highlights the connection between weather conditions, milk production and global dairy availability. Any material reduction in milk production in major exporting regions can affect the volume of dairy products available for processing and international markets, although the eventual impact will depend on how El Niño develops and how dairy-producing regions respond.
The development will therefore remain important for dairy processors, exporters and commodity markets heading into 2027, particularly as the industry balances climate-related supply risks with continuing demand for protein-rich dairy ingredients.
Source: Dairynews7x7 25 Sep, 2026 Read full story here
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