The overall GDT price index fell 3.2%.
Prices on the NZX dairy derivatives market indicated a fall in WMP prices of that magnitude.
NZX WMP futures settled yesterday at US$3230 a tonne, indicating traders expected a 3.6% fall in the price of Fonterra's regular grade WMP.
Last week Fonterra increased the amount of WMP for the auction after it revised its milk intake prediction for the season upwards.
Fonterra now expected to collect 5% less milk in the 2016-17 season than it did in the previous season. That compares to its previous forecast of a 7% fall.
Though the lift in Fonterra's milk intake expectations was not a surprise it had an impact on the market, AgriHQ dairy analyst Susan Kilsby said.
"Many buyers will be aware that milk intakes in New Zealand are starting to improve following very poor production during the spring.
“The dairy markets, however, are very closely balanced so it does not take much to tip the balance one way or other with small changes in supply volumes.
"Despite the weak result overnight the underlying market fundamentals are generally supportive for Oceania-sourced product.
“We see this price fall as more of a short-term market reaction to the change in Fonterra's milk forecast than the start of anything more serious."
A total of 13,950t of WMP was made available to the auction, 5% more than previously advised and also 5% more than was made available at the previous auction.
On the NZX Dairy Derivatives market the February WMP futures contract had been well supported.
When the market closed yesterday there were 9816 open positions on that contract, which equated to 9816t of WMP.
The final settlement price of the contracts was determined by the price Fonterra's regular grade WMP averaged across the two February GDT auctions.
Prices weakened for most commodities offered overnight.
The price index for skim milk powder dropped by 3.8% to achieve an average price of US$2574/t. SMP offered by Fonterra continued to trade at a good premium over similar product offered by European dairy company Arla Foods.
Kilsby said the large stocks of SMP being held in Europe were limiting prices for product from this part of the world.
"In Europe there is more than 400,000t of SMP being held in storage which is mostly owned by the European Commission.
“Buyers are aware of these large stocks so have little incentive to pay high prices for European-sourced SMP.
“However, some buyers prefer SMP from NZ and are willing to pay a premium to continue to source their requirements from NZ companies."
The cheddar price index dropped 5.3% last night. The near-dated contract with a March delivery date continued to attract a premium over the longer dated contracts indicating at a least one buyer was keen to receive product soon.
The milk fat commodities were mixed with anhydrous milk fat coming back 1.3% in price while butter prices lifted slightly. The butter price index gained 0.2% to trade at an average price of US$4598/t.
