A dairy farming leader says Fonterra's opening payout forecast for the coming season and confirmation it's on track for a record payout this season will give farmers confidence that they can expect another good year.
The co-operative has announced an opening milk price forecast for next season, which begins in June, of $6.75 per kilo of milk solids.
The total payout forecast is $7.15 to $7.25 - that includes dividends to farmer shareholders.
For the current season, ending in May, the latest total payout forecast is $8.00 to $8.10.
That is made up of a milk price of $7.50, a dividend range of 40-50 cents a share and a 10 cent-a-share profit increase, which could be retained.
Fonterra says it needs to be cautious in case international dairy prices fall and the exchange rate undermines returns.
Federated Farmers dairy chair Lachlan McKenzie says the opening forecast for the new season will reassure farmers that prices have stabilised.
However, Mr McKenzie says farmers will remain aware that it is only a forecast and that the international dairy market has been shown to be volatile.