It's lowered the forecast farmgate milk payout midpoint for this season, from 10-dollars to 9-dollars-50.
It follows a sharp drop in global dairy prices, sparked by a big lift in global supply.
Fonterra boss Miles Hurrell says while the forecast is well below last season's 10-dollar-16 payout, farmers should still be pretty happy.
He says it's still historically high, and should be well above the cost of production for the vast majority of farmers.
