KEY POINTS:
International dairy prices which provide New Zealand with more than 7 per cent of its gross domestic product are continuing to slump and are now "unsustainable" for suppliers, says Fonterra.
In today's monthly internet auction, the average selling price for whole milkpowder fell 8.2 per cent to US$1851 ($3676) a tonne, down 8.2 per cent on a month ago.
"Prices should be very attractive to buyers at these levels, and they are not sustainable for global suppliers," said Kelvin Wickham, Fonterra's managing director of global trade.
On January 28 Fonterra cut its payout forecast for its 10,000 farmers by 15 per cent to $5.10/kg milksolids this season - a billion dollar hit for the national economy - because of the way international prices had been falling.
At the start of the season farmers were expecting to receive at least $7/kg.
The internet auction prices fell 9.3 per cent in January's auction and 14 per cent in December.
Wickham suggested the slowing pace of the price slump may signal the market is about to bottom-out.
"Supply is slowing, inventories are running down and we believe we are in the trough of the market," he said.
The next online milkpowder auction will be held on March 3.
- NZPA
