The Global Dairy Trade index has eased yet again, following back-to-back 5.0 per cent drops.
This morning's decline, which saw prices fall 2.9 per cent across the board, is now the fifth in a row, and tenth in the last eleven auctions, after the record high achieved on March 1.
Whole milk powder (WMP) - which has the biggest influence on Fonterra's farmgate milk price - slipped 3.5 per cent, on the back of a 6.1 per cent decline in the previous event, to an average US$3417/MT.
Skim milk powder (SMP) - Fonterra's second-biggest reference product - bucked the trend with a 0.1 per cent increase to an average US$3524/MT, after falling 5.3 per cent in the previous event.
Just eight weeks ago, both milk powder products were commanding well above the US$4000/MT mark, and in March peaked at US$4757/MT for WMP and US$4481/MT for SMP.
Cheddar was the star of the event, leaping 4.2 per cent to an average US$5005/MT, following a 0.7 per cent dip two weeks ago.
Butter - which commanded US$7086/MT in March - turned a corner slightly, with a 0.2 per cent increase to an average US5204/MT.
Anhydrous milk fat experienced the most dramatic drop plunging 9.8 per cent, to an average US$4990/MT.
Butter milk powder, lactose and sweet whey powder were not offered at this event.
30,326 MT of product was purchased by 121 successful bidders.
On June 23, Fonterra lifted its 2022/23 forecast by 50 cents to between $8.75 - $10.25 per kgMS, from an opening range of $8.25 - $9.75.
The revised 22/23 forecast midpoint, off which farmers are paid, stands at $9.50.
Fonterra chief executive Miles Hurrell said he wasn't worried about the result, as it was expected.
"Some of the sentiment that we'd picked up in the last few weeks is starting to play out," he told The Country's Jamie Mackay.
Softening demand out of China had "played its part" with a drop across the board, Hurrell said.
China often had an influence on the result, he said.
"It's one of those markets that if it works - it works very well - and we've seen that play out in the last few years and it's underpinned the milk price very much over the last couple of years."
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However, when China was "doing it tough," such as with its current strict Covid restrictions, it made it "a little bit more difficult," Hurrell said.
"We've seen a general slowdown in their macroeconomic situation and [China's] general slowdown globally on a commodities front, and we feel that pain.
"So, that's playing out in the result you saw last night."
Hurrell said there was "nothing to suggest any change" to the 21/22 season forecast midpoint of $9.30 - but it wouldn't be finalised until around September 23.
As for the 22/23 forecast midpoint of $9.50, Hurrell said Fonterra would "have a good hard look" at it, but wouldn't confirm whether it would drop.
"A lot can play out. We've seen some short-term issues at the moment, but that medium-term and even the long-term picture still looks favourable."