Global dairy prices dropped slightly in Fonterra's latest auction - its first since the contamination scandal was revealed.
The Global Dairy Trade Weighted Index, which covers a range of 30 products, fell 2.4% to an average selling price of $US4847 per tonne.
The fall was the first in two months. But that is from very elevated levels and prices were expected to begin to come off at some point. Prices are still 73% above the same period a year ago.
Volumes traded also jumped nearly 60% to 60,587 tonnes of mixed dairy product. It was the highest amount sold in three years.
None of the products were connected with the contamination issue, as no whey products are traded in the auction.
Whole milk powder prices fell by 1.6% on average and skim milk powder by 3%. Fonterra maintained its premiums on selling prices.
Cheese and butter prices fell by an average of more than 4% and 5% respectively.
The auction, which is held fortnightly, was seen by some to be a test of confidence for Fonterra, and the small drop in prices could be down to the market correcting itself from previous highs.
Trade Minister Tim Groser told Radio New Zealand's Morning Report programme the auction shows dairy prices remain high and Fonterra continues to enjoy a price premium over producers from other countries.
Mr Groser said the next auction could provide a more accurate picture of the market's reaction.
Dairy exports earn about a quarter of New Zealand's $46 billion annual export earnings. New Zealand accounts for around a third of all globally-traded dairy product and has had a good growing season since May.
Rabobank senior dairy analyst Hayley Moynihan said the easing was expected and was a good result, given the events of the past few days.
She said it's clear that buyers recognised the auction involved primarily milk powder, butter and cheese, not the whey product at the heart of the contamination scare.
Bank of New Zealand economist Doug Steel said the increased number of bidders suggests some opportunists may have been looking for a bargain in the wake of the contamination scare. However they may have been disappointed, as prices dropped only slightly.
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