Fonterra has just announced a cut to its forecast farmer payout - from $5.30 a kg of milksolids - down from $6.00.

Shares in Chinese baby-milk maker Beingmate Baby & Child have rallied sharply since Fonterra entered an alliance with the firm, which includes the Kiwi dairy giant buying a 20 per cent stake in its new partner.

New Zealand rural confidence levels have fallen to a two-year low thanks to plunging dairy prices, according to Rabobank's latest quarterly rural confidence survey.

Fonterra is expected to reveal operating earnings at the lower end of an already published forecast range for the year to July 31 when it reports its result tomorrow.

The gap between what New Zealand earns from the rest of the world through trade and investment and what it pays widened in the June quarter as falling dairy exports started to weigh on the trade balance.

Danone Nutricia, one of the infant formula companies caught in the Fonterra whey protein contamination scare, says it is still feeling the effects of the incident one year on.

Dairy farmers in this country can expect to come under financial pressure if milk powder prices remain low and tensions in Europe continue to mount, say economists.

Fonterra chief financial officer Lukas Paravicini said the cooperative continued to enjoy a solid balance sheet position, despite a credit rating downgrade by S&P.

Fonterra's announcement that it would spend $1.17 billion on new plant and on taking a stake in a Chinese infant formula company is its biggest move yet in what has been an 18-month-long strategic plan to shift the company up the food value chain.

Fonterra is pinning its hopes on a tie-up with Chinese infant formula giant Beingmate as it pushes into China's lucrative baby milk market.

Westland Milk Products, the Hokitika-based dairy cooperative, has overtaken rival Fonterra in cutting its forecast payout to farmers.

Fonterra says it plans to spend about $1.17 bon taking a 20 per cent stake in China's Beingmate Baby & Child to boost its baby formula aspirations there.

What a difference a year makes. Twelve months ago Fonterra chief executive Theo Spierings was facing the fallout from the disastrous botulism false alarm, which sparked panic in markets across the globe, especially China.

Dairy prices showed signs of stabilising overnight, with the GlobalDairyTrade main price index slipping by just 0.6 per cent.

Dairy product prices slumped to the lowest level since October 2012 in the latest GlobalDairyTrade auction, paced by whole milk powder and cheddar.

Commodity prices fell for a fifth straight month, led by whole milk powder, reflecting a build-up of inventory in China and strong local milk production.

A sharp reduction in Fonterra's milk price will put the squeeze on the industry and rural communities will feel the brunt of the economic impact.

Fonterra has reduced its latest forecast farmgate milk price $7.00 to $6.00 per kgMS - a total drop in payments to farmers of $4.3 billion from last season.

Fonterra says it's 'realigning' its packing operations at its Canpac plant in the Waikato - and 110 jobs may be lost as a result.

French food giant Danone says a High Court judge's decision halting its legal action against Fonterra will create undue delay.

Fonterra has successfully put Danone’s legal action against it in New Zealand courts on hold.

Big changes lie ahead for the international dairy trade when the European Union (EU) dismantles its 30-year-old quota system next year.

Agriculture reporter Jamie Gray looks at reasons why it’s not yet doom and gloom for the dairy sector following this morning's drop in global dairy prices.

The pressure is on Fonterra’s $7.00 a kg farmgate milk price forecast for this year after another sharp fall in international dairy prices overnight.

Fonterra-owned GlobalDairyTrade (GDT) has added another product line and a new participant to its online trading platform.