The forecast, which currently stands at NZ $5.25/kg of milk solids (21.7 c/l), is under downward pressure after a series of sharp falls on the GDT (Global Dairy Trade) auction platform.

World dairy commodity prices have slumped since March. At this week’s GDT auction, the price index dropped by again by 10.7%. Declines in WMP (whole milk powder) have led the prices down.

WMP sold at this event at US $1,848 (€1,700)/tonne down from $3,272 (€3,010)/tonne in February this year and from $5,005 (€4,605)/tonne in February 2014.

Dairy markets have been suffering from a big supply/demand imbalance, which has hit prices hard. There is a lack of demand globally, particularly from China and Russia, coupled with a huge surplus from New Zealand, Australia, EU and US.

ANZ bank has revised its farm gate milk price down to $3.75 to $4.00/kg of milk solids (15.5-16.5 c/l) from its previous forecast of $5.40/ kg (22.4 c/l). This week’s WMP price would return a milk price of NZ 5.00/kg (20.7 c/l) before processing costs, which could be as high as 8 c/l.

The breakeven milk price for most farmers In New Zealand has been estimated at $5.70/kg milk solids (25.6 c/l).