UPDATED 12.54pm: Fonterra is blaming lower than expected commodity prices for a reduction in its forecast Farmgate Milk Price for the 2014/15 season.

The forecast price is now $4.40 per kilogram of milk solids.

The change amounts to a forecast cash payout of $4.60 - $4.70 for a fully shared-up farmer.

The co-operative has announced an opening forecast Farmgate Milk Price of $5.25 for the 2015/16 season

Chairman John Wilson points out the revised forecast reflects global commodity prices not increasing as fast as expected.

He says increased supply and good growing conditions in dairy-producing countries has over-supplied the market.

Labour is expecting dairy farmers to feel the squeeze from the latest milk price figures.

Labour Party Finance spokesman Grant Robertson has told Newstalk ZB the bounce back in price is only modest.

"A lot of farmers seeing these figures today are going to realise that they are in severe trouble for next year and the communities around them are going to suffer."

Green MP Catherine Delahunty wants Landcorp to halt conversions of forests to dairy farms until it can show they stack up economically.

"It's not sensible economic strategy for a government agency to rely on a commodity that is basically at the mercy of this kind of global downturn."