New Zealand faces the fourth-highest per-capita increase in fuel costs worldwide from the 2026 oil price shock, according to the Centre for Research on Energy and Clean Air.
The Reserve Bank of New Zealand's Monetary Policy Committee delivered a 4-3 surprise hold on the official cash rate at 2.75 per cent on 28 October 2026, defying near-universal expectations of a 25 basis point rise and triggering an immediate 1.3 per cent drop in the New Zealand dollar to 56.1 US cents.
The Reserve Bank of New Zealand's Monetary Policy Committee voted 4-3 on 28 October 2026 to hold the Official Cash Rate at 2.75%, defying market expectations of a 25 basis point hike to 3.00%. The decision underscores internal divisions on whether recent fuel-driven inflation pressures warrant immediate pre-emptive action or a pause to assess transmission of the July and September increases.
Fonterra Co-operative Group has raised the midpoint of its 2026/27 farmgate milk price forecast by 25 cents to NZ$9.75 per kilogram of milksolids. The new range is NZ$9.00 to NZ$10.50 per kgMS.
The revision follows stronger prices for whole milk powder and skim milk powder at recent Global Dairy Trade auctions. Fonterra processes most of New Zealand's milk and its forecast serves as a benchmark for the sector.
Chief Executive Richard Allen said the gains came from sustained demand.
Over the last two events, our WMP and SMP pricing on Global Dairy Trade has increased by about 5 percent and 7 percent respectively. This is driven by sustained demand from across Southeast Asia, Middle East, Africa and China.
Fonterra also increased the October 2026 advance payment rate by 20 cents to $7.55 per kgMS. The co-operative reported record early-season milk collections.
A season of revisions
The 2026/27 season opened at a $9.75 midpoint in May, fell to $9.25 in July, rose to $9.50 in September and now stands at $9.75. Fonterra narrowed the range in the latest update.
Dairy cows on New Zealand pasture, where record early-season milk collections underpin Fonterra's lifted farmgate price forecast.
Bank forecasts have moved higher. BNZ projects $10.00 per kgMS while ANZ holds $9.80 but sees above $10.00 as possible. NZX milk price futures trade above $10.30 per kgMS.
September 2026 milk collections rose 1.9 percent year-on-year with season-to-date volumes up 3.0 percent. Fonterra forecasts full-season collections just above 1.6 billion kgMS.
Fixed-price tender volumes contracted by farmers reached a record exceeding 125 million kgMS. The organic milk price midpoint rose to $15.25 per kgMS.
Risks and tailwinds
Risks remain. Dry spring conditions in parts of New Zealand and potential later El Niño effects could affect supply. Butter and anhydrous milk fat prices moved lower at the latest auction. The New Zealand dollar has weakened about 5 percent against the US dollar, supporting exporter returns.
Stats NZ data showed the milk powder, butter and cheese category contributed $1.472 billion to September goods exports, up 9.6 percent on the prior year. Dairy remains a major driver of New Zealand merchandise trade and rural incomes.
