Cheap milk on the way? Not so fast says Fonterra

World dairy prices have slumped this year, but don't expect to see the price of milk at your local supermarket falling, says Fonterra. Photo / APN

The price of dairy products on the international market has taken a hit in recent months, but New Zealand consumers should not expect to see that translate into cheaper milk on the supermarket shelves, says Fonterra.

Recent GlobalDairyTrade auction results have shown dairy prices falling 26 per cent since early February, as a strong increase in global supply has weighed on prices.

Fonterra's managing director for New Zealand Peter McClure said ructions on world markets would not make their presence felt in the domestic market.

Fonterra had absorbed much of the increase over what turned out to be an exceptionally strong 2013/14 year, McClure said.

"This last year has been an unusual year because it has spiked quite dramatically upwards to an all-time record, and so we just simply have not been able to pass all of that on - not by quite a margin," he said.

"Now that it's coming down again, we are back to where we have been, so during that time we have basically taken a hit on the spike."