Fonterra further stoked the uncertainty over a recovery in dairy prices by forecasting a revival – but saying it did not know when it would occur, or by how much.

Furthermore, the New Zealand-based giant, the world's top dairy exporter, cut its forecast for its payout to milk producers.

Theo Spierings, the Fonterra chief executive, acknowledged that there appeared to be "some early signs of strengthening dairy prices", spurred by weather setbacks such as the split in Europe between areas with too much rain and too little, US drought, and the weak start to India's monsoon.

These factors are "contributing to some of the firming in global dairy prices", which at Fonterra's own globalDairyTrade auctions have recovered 16.3% from a near-three-year-low in May.

'Don't know when...'

However, Mr Spierings, urging Fonterra's farmer shareholders to "plan cautiously", remained equivocal on prospects.

"Our forecasting anticipates some recovery in global dairy prices, but we don't know how strong this recovery will be or when it will kick in," he said.

Dairy price prospects are the subject of some debate, with buoyant Australasian production raising doubts over the ability of slowdowns in northern hemisphere countries to support values.

Currency hit 

The comments came as Fonterra cut to NZ$5.25 per kilogramme of milk solids, from NZ$5.50, its forecast for its payout for milk supplies in 2012-13.

The reduction took the payout NZ$0.80 per kilogramme of milk solids on the 2011-12 result.

Furthermore, the group trimmed by NZ$0.05 per kilogramme of milk solids, to NZ$0.45-0.55, its forecast for the payout related to Fonterra's profits.

The downgrades reflected the "continuing strength" of the Kiwi dollar, which has meat that dairy values as traded in US dollars are less valuable in New Zealand terms.

"We've actually seen improving prices in recent globalDairyTrade trading events, but the strength of the Kiwi dollar is eroding any gains," Sir Henry van der Heyden, the Fonterra chairman, said.