Fonterra's New Zealand milk collection fell 10 per cent in the first month of the 2017 season, a typically low production period.

The Auckland-based dairy cooperative collected 9.9 million kg of milk solids in June, down from 11.1m kg in the same month a year earlier, Fonterra said in its monthly Global Dairy Update.

North Island collection fell 6 per cent to 7.6m kg while the South Island dropped 22 per cent to 2.3m kg.

Fonterra said milk production "continues to be heavily impacted by the reduction in Australian milk prices to align with global dairy prices".

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The slow start to the season comes at a time when farmers have culled livestock to cope with a slump in global dairy prices, and yesterday's update shows total New Zealand production fell 2 per cent in the 12 months ended May, with a 4 per cent increase in the final month of the 2016.

Fonterra Shareholders' Fund units increased 2c yesterday to close at $5.47.