Prices were down 2.6%, including a 1.7% fall in whole milk powder and 5% falls in butter and anhydrous milk fat.
The GDT index is back at its end-June level just under 1000 having lost an accumulated 10% in April and May.
Dairy analysts say a farmgate milk price of $6.70 to $7.10/kg milksolids remains a sound statistical and financial prediction this season.
Fonterra’s forecast remains appropriate, they say, in a range of $6.25 to $7.25.
ANZ agriculture economist Susan Kilsby said whole milk powder prices are expected to stay about US$3000 a tonne in the near term with rises expected later this season.
“It is becoming clear that global milk supply growth is subdued and therefore higher prices will be needed to balance supply and demand.
“Milk supply is virtually stagnant in the main dairy-exporting countries, meaning there is a high chance that demand will outstrip available supply.”
ANZ revised its forecast down 20c to $7.10, incorporating an assumption the NZ dollar will ease but it was made before the 0.5% reduction in the Official Cash Rate that cut 1c from the NZD/USD crossrate, now US64.5c.
One cent movement in the cross rate translates into 10c/kg movement in the milk price if applied across a whole season.
Westpac economists took 20c out of their forecast, which is now one of the lowest at $6.70.
The China-United States trade war is expected to lower Chinese consumer demand for dairy products, they said.
“While growth in milk supply in key exporting regions still looks likely to be modest, recent developments suggest the outlook for Chinese consumer demand and global growth has deteriorated.”
ASB senior rural economist Nathan Penny said the 2.6% fall in GDT prices is relatively modest considering the escalation in the trade war in the past week.
The price move is not much different to the average 2.2% auction price movement over the past year.
“We continue to note that food exports, including dairy, are likely to prove the exception to the trade war rule,” Penny said.
Chinese household spending is one of the better performing sectors in what is an otherwise softening growth outlook for that economy.
Also, Chinese restrictions on US agricultural exports might actually help NZ dairy products.
The ASB milk price forecast is steady at $7, with a wide range for error of $6.50 to $7.50.
Meanwhile, Rabobank has lifted Fonterra one place to fourth in the list of world’s biggest dairy companies, behind Nestle of Switzerland and Lactalis and Danone of France.
FrieslandCampina, the Netherlands, is also up one place to fifth while Dairy Farmers of America fell two places to sixth.
Fonterra’s 2018 turnover, at US$14.3 billion is $4b behind Danone, with which it had a major dispute following the whey protein concentrate recall in 2013.
