Economists have pared back their forecasts for Fonterra Cooperative Group's milk payout to its farmer shareholders for the current season after dairy prices tumbled in the overnight GlobalDairyTrade auction.
Last month, Fonterra kept its forecast farmgate payout at $6 per kilogram of milk solids, citing the rebalancing of demand and supply.
Overnight, the GDT price index, which covers a variety of products and contract periods, slid 6.3 percent from the previous auction two weeks ago to US$3,512 ($5,048), its lowest level since early last November.
Whole milk powder, which makes up the bulk of the auction, sank 12.4 per cent to US$2,782 a tonne.
Global dairy prices have become increasingly volatile in recent years as government subsidies and schemes propping up prices have reduced, allowing prices for more products to be set by the market.