Anhydrous milk fat prices were down another 5.2% after falling 9.8% at the last sale.
“The pace and magnitude of the price declines across all products over December has been greater than our already pessimistic forecasts that we published in November,” ASB said.
Prices worldwide are being driven lower by strong milk production in most of the main dairy-producing countries.
Volumes sold on the platform this week were up 6% compared with this time a year ago, the bank noted.
The overall Global Dairy Trade auction (GDT) price index is now 12.6% below a year ago and below its 10-year average, with milk powder prices driving the longer-term weakness.
Whole milk powder prices are around 3% below the 10-year average, while skim milk prices are 8% below the 10-year average.
“The lower NZ dollar has provided some help, but almost all the hedging for the current season should be in place in our opinion,” ASB said.
Futures markets, alongside recent GDT events, are pointing to ongoing dairy price weakness, with product prices showing no clear signs of a lift over the summer months.
Milk price futures for the current season point to a $9.10/kgMS price.
NZX Dairy said this morning’s sale delivered a more bearish outcome than expected.
“This ninth consecutive decline reflects persistent supply-side pressure in global dairy markets, as milk availability continues to run high across several key producing regions,” Cristina Alvarado, NZX Dairy’s head of insights, said in a report.
“Strong milk production in the United States and Europe, alongside continued output from Argentina, has maintained ample exportable supply,” she said.
“In addition, China reported a second consecutive month of year-on-year growth in milk production in its latest data release, with October milk production up 2.1%, further reinforcing the perception of plentiful global supply.”
Overall, the auction highlighted that ongoing strength in global milk production continues to weigh on prices, with buyers showing “limited urgency in an environment of sustained supply abundance”.
This morning’s GDT auction was the last for 2025.
Jamie Gray is an Auckland-based journalist, covering the financial markets, the primary sector and energy. He joined the Herald in 2011.
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