The GDT price index fell by 0.4% and whole milk powder prices went down 0.8%.
Prices of the other products were mixed, including small reductions for anhydrous milk fat, lactose and cheddar and small rises for skim milk powder and casein.
ASB chief economist Nick Tuffley said it is encouraging United States-China trade tensions and the weakening renminbi are not having a material impact on dairy prices.
Until the impact of New Zealand’s spring milk flush on world prices is known ASB will maintain a $7 payout prediction.
Westpac NZ strategy head Imre Speizer said the spring production statistics will be vital and early indications are for decent volumes but not the record set last September.
The Westpac pick for milk price is $6.50, after being cut by 20c in August.
Rabobank analyst Emma Higgins said the latest GDT results support Fonterra’s forecast range of $6.25 to $7.25/kg milksolids, which the company reaffirmed last week.
Steady GDT prices in the last two events given currency turbulence and higher offerings are a good sign and weather conditions might produce another bumper spring peak.
Rabobank has a forecast of $7.15.
ANZ economist Susan Kilsby made a $7 payout prediction but raised the possibility of further write-downs to come this financial year from Fonterra operations in China, Chile and Australia.
She estimates further asset impairments of $300 million to $700m in this financial year, following the $800m-plus write-downs announced in August for the last financial year.
Withholding some portion of the payout is not unprecedented because it happened in 2013-14.
But Fonterra said she doesn’t yet know the state of the balance sheet for last financial year let alone in a year’s time, nor the anticipated recovery in earnings in FY2020 under a new strategy.
Retention of earnings, for whatever reason, is a decision for the directors.
“There has never been any suggestion that some portion of payout would be retained,” a spokesman said.
Impairments are non-cash book entries and in no way affect Fonterra’s cashflow and payments to its suppliers and farmers.
