"But if anything it's a suggestion that the rate of decline might be slowing a little bit," Steel said.
"Whether it ultimately is or not will depend on what's happening globally and certainly there is a lot more fear around that the global economy is losing steam."
The farmer co-operative's opening forecast payout for the 2011/12 season is $7.15-$7.25 before retentions, which includes a milk price of $6.75 a kilogram of milksolids and a distributable profit range of 40c-50c a share.
"When Fonterra made their forecast they had some combination of falling commodity prices and stronger dollar baked into it but how much is always open to a few unknowns," Steel said.
"Market movements in terms of commodity price and the currency so far, while starting to question the payout forecast, I don't think it's enough to warrant a downgrade."
ANZ rural economist Con Williams said he had been expecting some weakening in prices largely because of increased production of milk fat products and skim milk powder by New Zealand, the European Union and United States in the past two months.
Whole milk powder prices had stabilised a little, Williams said.
"Perhaps that's the first sign that we're getting towards the bottom of prices."
The joker in the pack was the New Zealand dollar and where that might head, Williams said.
"At the moment the dollar looks overvalued versus where those commodity prices have got to so you expect some re-evaluation of that."
The dollar has now shed US2.18c since hitting a post-float high on Monday, to be trading at US86.24c at 5pm yesterday.
Westpac senior market strategist Imre Speizer said the markets had clearly been in risk-averse mode.
"That's a negative for the Kiwi dollar for sure," Speizer said.
"This should be the beginning of a correction of at least the up-move since the middle of March."
If the rise since the middle of March was corrected then the kiwi should fall to US85c at a minimum but more likely somewhere between US80-82c, he said.
"That'll obviously be very pleasing to any exporter."
The big driver of currency value versus the greenback, particularly during the past month, had been the fortunes of the US dollar, which had been closely tied to the fiscal and debt ceiling negotiations, Speizer said.
"They've got an agreement ... the market's going to probably ignore fiscal matters in the US for the next few months and it's now looking more at global growth and somewhat still at the eurozone debt crisis."
There was a stream of numbers pointing to a fairly weak US economy.
"You're not looking at a very good environment for risky assets and risky currencies like the kiwi."
The eurozone debt crisis had not been resolved, Speizer said.
"We haven't really resolved anything except to give Greece a month or two breathing space."
The market on Tuesday night focused on Italy, questioning whether that country would have the money to meet large cash payments in September, Speizer said.
"I think that's [eurozone debt crisis] going to be a negative factor for quite a while yet."
SPILT MILK
Fonterra online dairy auction
* 1.3pc drop in the average price for a basket of products.
* US$3716 a tonne average winning price is the lowest since December 15.
* 663,250 tonnes expected to be sold through auction during the next year.
* NZ dollar down 2.5 per cent in two days.
