Globally-traded butter prices have fallen 25 per cent since September - but supermarket shoppers shouldn't expect to bank all of that benefit.
Butter sank 11.1 per cent to US$4575 ($6648) a tonne at the Global Dairy Trade auction overnight.
"Butter was last at this price level in the early months of this year," Amy Castleton, AgriHQ dairy analyst, said in a note.
"Butter prices have now declined for five consecutive events, and have lost 25 per cent of their value since September."
ASB rural economist Nathan Penny said that there was typically a lag between and that price movements at dairy auctions were far more pronounced than those in retail prices.
"The commodity price is just one component [of the retail price], you've got wages, you've got transport, you've got marketing, you've got profit margins for retailers and all of the players in between. You'll see [retail price falls] with a lag and a smaller magnitude of price fall."
Retail butter prices hit a record high in October, according to Statistics New Zealand's food price index, with the average 500g block at $5.67, compared to $3.50 at the same time in 2016.
A 500g block of Anchor butter is being advertised on Countdown's website for $6 on special, while a block of Mainland butter is $7.60.
Dairy product prices rose overall at the GDT auction, increasing for the first time in five auctions, amid expectations that dry weather conditions in New Zealand might ease milk production.
The GDT price index rose 0.4 per cent from the previous auction two weeks ago to US$3091. Some 29,514 tonnes of product was sold, down from 35,042 tonnes two weeks ago.
Whole milk powder gained 1.7 per cent to US$2830 a tonne.
"The lower volume on offer appears to have provided some support as nearly all of this product was sold," Castleton said.
"Buyers may also be concerned about the dry conditions in New Zealand. Contracts for shipping in March and April saw the greatest support."
"New Zealand milk production has coped okay with adverse weather conditions to date, but continued dry conditions are likely to affect milk production through the summer months," Castleton added.
At the latest GDT auction, skim milk powder climbed 4.7 per cent to US$1774 a tonne, while butter milk powder gained 4.3 per cent to US$1957 a tonne.
Rennet casein added 3.4 per cent to US$4879 a tonne, while whole milk powder advanced 1.7 per cent to US$2830 a tonne.
Nearest dated contracts fell the most — prices for butter to ship in January dropped 24.3 per cent, according to Castleton.
Cheddar fell 3.9 per cent to US$3696 a tonne, while anhydrous milk fat slipped 0.6 per cent to US$6836 a tonne.
No prices were available for lactose.
The New Zealand dollar last traded at 68.79US cents at 12.15pm in New York, compared with 68.59US cents at 5pm in Wellington the previous day.
There were 123 winning bidders out of 160 participating at the 13-round auction. The number of qualified bidders rose to 563, up from 557 at the previous auction.