Fonterra's unit price and the New Zealand dollar partly recovered yesterday after both were sold down on the back of the latest contamination scare, but economists said the fallout could extend to the farmgate milk price.
The Fonterra unit price immediately slumped to $6.50 at the opening on the NZX - its lowest point since last December - after the weekend's developments, but recovered ground to close at $6.86 - down 26c or 3.65 per cent.
The New Zealand dollar clawed back ground to trade late in the local day at US77.6c, well off its session low of US76.93, but still down from US78.87c in late local trade on Friday.
Peter Cavanaugh, client adviser at Bancorp Treasury Services, said the foreign exchange market's initial response to the news that three batches of whey protein had tested positive for a strain of clostridium, which can cause botulism, was understandable.
"It is pleasing to see that the New Zealand dollar has survived the opening and there has not been any substantial follow-on selling out of Asia," Cavanaugh said.