Aug 25 (Reuters) - Fonterra Co-Operative Group Ltd FCG.NZ :
* Fonterra increases 2016/17 forecast farmgate milk price
* Today increased its 2016/17 forecast farmgate milk price by 50 cents to $4.75 per kgms
* Says "expect the dairy market to be volatile over the coming months"
* Milk production in the EU is now in decline
* "Total payout available to farmers in the current season is forecast to be $5.25 to $5.35 before retentions"
* New Zealand milk collection at this early stage is around 4 percent lower for the year to date
* Current global milk prices remain at unrealistically low levels
* Current global milk prices started to improve as global demand and supply continue to rebalance
* All figures in NZ$
* Source text for Eikon ID:nNZS85wa