Global dairy prices have fallen to a nine month low in the latest global dairy auction.
Photo: RNZ / Cosmo Kentish-Barnes
The average price at the fortnightly sale fell 5 percent to $US4166 a tonne, after falling 4.1 percent in the previous auction.
It is the lowest price since early October last year, and 18 percent below the record set in March. Prices have fallen in eight of the past nine auctions.
"Every indicator over the last fortnight has been signalling a coming serious slide or correction," NZX dairy analyst Alex Winning said.
"Extra volumes on the GDT platform and expectations of market pressures on end consumers have created a market that expected - almost needed - prices to fall significantly lower."
The price of wholemilk powder, which strongly influences the payouts for local farmers, was 5.1 percent lower at $US3757 a tonne.
Prices for all other products offered also fell, with anhydrous milk fat and butter down 2.1 percent, cheddar falling 2 percent, and an 8.6 percent decline for skim milk powder.
Winning said buyers from South East Asia had saved the day buying as much as Northern Asian bidders, especially for whole milk powder.
"This downwards price direction is also unsurprising considering wider macroeconomic factors; food service will be expecting some impacts and affordability of butter for households will also be questioned currently. "
Winning said the broader market was getting back into balance amid broad uncertainty, even though it might be unpalatable for local dairy producers.
"It could be expected that prices will start to find support at these levels soon and look to track higher again into peak NZ milk on the back of more agreeable prices for the wider market."
The current midpoint of Fonterra's forecast milk payout for the current dairy season is $9.50-per kilo of milk solids.