Dairy co-operative, Fonterra, has held its forecast milk price to farmers at $4.70 per kilo of milk solids for the current season.

When Fonterra last reviewed the payout in December, the price dropped from $5.30 to $4.70, due to weaker dairy prices.

Photo: RNZ / Diego Opatowski

Since then, the dairy co-operative's key price, whole-milk powder, has risen 45 percent.

But Fonterra chair John Wilson said the increase in dairy prices is not sufficient to raise the payout at this point.

He said there continues to be significant volatility in international commodity prices.

"Today's forecast reflects the board and management's best estimates at this time. We are advising farmers to continue to be cautious with budgeting and we will update them as the season progresses," he said.

Federated Farmers dairy spokesman, Andrew Hoggard, said farmers would have liked an increase, especially with many in the South Island also battling drought, but Fonterra's decision would not come as any great surprise.