Global Dairy Trade prices nosedived again at auction on Tuesday night, with the GDT index down 4.7 per cent, the biggest decline this year.
The fall came just a day after Fonterra announced it was slashing its forecast farmgate milk price for its New Zealand farmers this season by $NZ0.20 a kilogram milk solids.
Prices have fallen at six of the seven auctions this year and are down by more than 9pc.
Five of the commodity groups fell on Tuesday night - led by anhydrous milk fat (down 7.2pc) and whole milk powder (down 5.2pc).
The only bright spot was cheddar, which was up 3.8pc, reversing some of the double-digit declines at the previous two auctions.
"Global dairy prices are limping into the end of the season," Westpac NZ senior agri economist Nathan Penny said.
"The result was below expectations.
"However, we expect this price weakness will prove temporary.
"Indeed, as the Chinese economy gains momentum over the course of the year, following its reopening, we expect improved Chinese demand will lift global dairy prices."
He said the bank was sticking with its healthy 2023/24 milk price forecast of $NZ10/kg MS.
Fonterra revised its forecast 2022/23 NZ farmgate milk price on Monday to $NZ8-$8.60/kg MS, down from $NZ8.20-$8.80/kg MS.
This cut the midpoint to $NZ8.30/kg MS from $NZ8.50/kg MS.
Fonterra CEO Miles Hurrell said the change reflected short-term demand for products being softer than expected.
"Since our last update in February, prices for our products on Global Dairy Trade have either declined or remained flat," he said.
The two main drivers behind this were demand from China for whole milk powder not yet returning to expected levels and northern Hemisphere milk production increasing.
"With these factors weighing on demand, prices have not increased to the levels required to sustain a higher forecast farmgate milk price for this season," he said.
Want to read more stories like this?
Sign up below (select Dairy News) to receive our e-newsletter delivered fresh to your email in-box twice a week.
Carlene Dowie
Carlene Dowie is the editor of the Australian Dairyfarmer magazine and has more than 30 years' experience as a rural journalist.
Carlene Dowie is the editor of the Australian Dairyfarmer magazine and has more than 30 years' experience as a rural journalist.
