At overnight auction, dairy prices fell by 3.6 percent to an average price of $US2620 a tonne. Whole milk powder dropped by 4.3 percent while skim milk powder fell 7.8 percent.
AgriHQ analyst Susan Kilsby of AgriHQ said she also expected a further fall, as there was still a global over-supply of milk. She expected supply and demand to come back into balance within six months or so, allowing prices to pick up again.
Federated Farmers dairy chair Andrew Hoggard said the latest dairy price drop made the prospect of a lift in farmers’ milk prices this season even less likely than it was earlier. As well, it reduced the likelihood of an increased advance rate in the payout for next season.
The new dairy season starts in June, and Mr Hoggard said farmers struggling with the low milk price should to talk to their banks and accountants.
Fonterra Fund’s shares fell to an all-time low of $5.50 following the auction results while the Co-operative Group’s shares fell to $5.20 before recovering a bit.