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Prices have slumped in the latest global dairy auction overnight as supply outpaced demand.
The average price at the auction fell 4.3 percent to US$4043 (NZ$6897) a tonne, following a modest 0.3 percent fall at the previous auction a fortnight ago.
The price of wholemilk powder, which strongly influences the payouts for local farmers, fell 5.3 percent to US$3809 a tonne.
Prices for other products were generally weaker, including butter, which fell 2.5 percent, skim milk powder, down 5.8 percent, and mozzarella, which fell 4.6 percent.
Cheddar was the only product that saw a lift in prices, up 3.6 percent.
NZX head of dairy insights Cristina Alvarado said the latest auction “delivered a clear bearish result”.
“The outcome was broadly in line with our expectations, although powders fell more sharply than anticipated, dragging the overall index lower,” she said.
Alvarado said North Asia (includes China), accounted for half of total purchases and drove volumes, while other regions scaled back.
She said the result showed the impact of strong supply.
“Record New Zealand collections in the opening months of the 2025/26 season have combined with strong output growth from the United States (up 3.4 percent year-on-year in July), Argentina (up 7.7 percent), and Uruguay (up 3.0 percent),” Alvarado said.
She said European Union production also returned to modest growth, with Australia the only major exporter in contraction.
“[The event] underscores the challenge facing dairy markets: strong production and ample export availability meeting increasingly tested demand.”