Fonterra is keeping a close eye on the ongoing dispute between Russia and the Ukraine, saying the associated ban on dairy goods could affect prices its farmers will get this season.
The dairy coopertive yesterday revised its farmgate milk price to $5.30 per kilo of milk solids, down from $6.
Russia has banned imports of dairy products from Europe over the dispute and Fonterra says the ban means 250,000 thousand tonnes of cheese - the equivalent of 2.5 billion litres of milk - will flow back into Western Europe and affect supply.
Fonterra chairman John Wilson said the situation is affecting global milk flows.
"We've now got quite a lot of geopolitical uncertainty and I guess what's front of mind is the impact on the decisions in Russia and what impact that's having on milk flows around the world.
"So uncertainty, but we have a degree of confidence that that will flow through over the next few months."