Fonterra has lifted its forecast milk payout for this season due to high international commodity prices.
The dairy cooperative has announced an increase in its forecast milk price of 30 cents to $6.90 per kg of milk solids.
Chief executive Andrew Ferrier says international dairy prices have held up better than the company initially expected when it made its opening forecast in May.
Mr Ferrier says there is solid demand in global markets for key dairy ingredients and it is being underpinned by some supply growth out of the northern hemisphere.
Federated Farmers says the lift in milk price is tempered for farmers by the reality that they are going to make less money this season than last if their production is down.
Dairy chair Lachlan McKenzie, says more than three quarters of all dairy herds are in the North Island where some farmers are having to dry-off stock now due to lack of pasture growth, several months earlier than normal.
But he says the increase in the forecast milk price will give farmers confidence to buy supplementary feed.