Private dairy ingredient manufacturer Open Country Dairy has told its suppliers to expect a reduced payout in a range of $4.70 to $4.90 per kg of milksolids for 2014/5, MyFarm said in a newsletter.
MyFarm, a farm investment specialist, said Open Country was the first dairy company to signal asub $5 kgMS price, although most analysts expect others to follow.
At the last GlobalDairyTrade auction on November 5, prices eased by just 0.3 per cent compared with the last auction in mid-October.
The result built on a 1.4 per cent gain in prices at the last auction, which came after a near 50 per cent drop since hitting a peak in February.
Whole milk powder - New Zealand's biggest export - sold for US$2522 a tonne, up 1.6 per cent from the last auction, still almost $1000 short of where it needs to be in order for Fonterra to meet its revised farmgate forecast of $5.30 a kg for 2014/15.
Dairy prices have fallen sharply this year, due mostly to a build-up of inventory in China, the effects of the Russian ban, and increased production worldwide.
Bank economists generally expect Fonterra's farmgate milk price to sink to around $4.80-$4.85 in 2014/5.
