Fonterra chief executive Theo Spierings says the dairy giant sees a more balance and stable global picture.

Dairy farmers should be more confident on increased forecast milk prices but Fonterra chief executive Theo Spierings warns it is not all rosy yet.

The dairy giant on Wednesday lifted its forecast milk price for the current season by 15 cents to $6.15 per kilogram of milksolids.

At the same time, it forecasted an opening price of $6.50/kg MS for the 2017-18 season.

BEN CURRAN/FAIRFAX NZ The dairy giant lifted its forecast by 15 cents.

"World dairy prices have risen in recent months and as we near the end of the season we have more visibility and certainty which makes us confident of our $6.15 position," Fonterra chairman John Wilson said.

READ MORE:

* Fonterra expected to offer prudent 2017-18 forecast

* Open Country Dairy's new season forecast welcomed by farmers

* Payout predicted to rise for NZ farmers after another increase in world dairy prices

ASB said the forecast suggested Fonterra saw relatively bullish prospects for the upcoming season.

DOMINICO ZAPATA/FAIRFAX NZ Waikato Federated Farmers president Andrew McGiven says farmers should be a lot more confident after two years of pain.

Most dairy farmers would be setting up for a season in the black, the bank said.

"The opening season forecast is likely to lead to an increase in farmer confidence and bring forward some farm spending and investment."

Waikato Federated Farmers president Andrew McGiven said it was great news for farmers and for the economy and showed a strengthening world market.

BEVAN READ/FAIRFAX NZ Fonterra chairman John Wilson says rising world dairy prices have given Fonterra certainty around its forecast.

The opening forecast should give farmers a lot of confidence going into the season, he said, but he hoped farmers would use the extra cash to pay off debt accumulated over the past two seasons of low milk prices.

The good prices would not last and farmers can use this extra cash to consolidate themselves for when the next forecast dip came.

"Two years of low payout has put people back four to five years, especially with debt servicing and repair and maintenance on farm machinery."

"Hopefully guys have set themselves up and are a better position financially," he said.

Spierings said the forecast was a balanced view of the world, rather than being bullish.

There was still more than a year to go in the next season, over which time he said the price could go up or down by about $1.

Stronger production in March and April had partly offset lower peak production, meaning collections were now only expected to be down 3 per cent for the season, rather than the forecast 7 per cent drop.

Spierings said he expected local production would see growth of about 2 to 3 per cent over the next year.

McGiven hoped Fonterra's forecast would not see Europeans and Americans flood the market, but Spierings said Europe would be more cautious after the low prices experienced in the last couple of years, while US exports were down as it focused on the domestic market.

Spierings said prices should be between $6 and $7 over the next year.

"If Russia opened up again there would be a price spike.

"But we see quite a balanced and stable picture."

Farmers would be more confident given the forecast, he said, but should be really cautious.

Fonterra confirmed its earnings a share forecast range of 45 to 55c and said it still targeted a full year dividend of 40c a share.

"They've come out of two relatively poor seasons," Spierings said.

"It will take time, it's not all rosy."