Fonterra says it will review its forecast milk payout to farmers after prices fell at its latest online dairy auction.
The export-led recovery is under threat after the fourth consecutive month of price falls for New Zealand's largest exporter.
In May, the dairy co-operative forecast a payout, before dividends, of $6.60 cents per kilo of milk solids.
Since then, prices have dived. The average selling price for all products fell by 8.3% early on Wednesday to $US3080 per tonne. Previous declines were 14% in July, 3.5% in June and almost 1% in May.
Whole milk powder prices fell by 7.7% to $US2974 per tonne on Wednesday. Despite the falls, dairy prices were 29.7% higher than this time last year.
Fonterra says it will review the payout for the current season, in light of the falls and the high New Zealand dollar.
The dollar was trading about US68c when it made its forecast in May and on Wednesday evening was buying US73.5 cents.
Agricultural analyst Agri-Fax cut its forecast below Fonterra's $NZ6.60 cents per kilogram of milk solids to $6.10.
Investment bank Goldman Sachs says the final payout to farmers could be below $6. That would strip $900 million from the New Zealand economy compared with last season.
Goldman Sachs is picking economic growth of 3% during the coming year, but that is dependent on strong exports, given weakness elsewhere in the economy.
Lincoln University dairy expert Keith Woodford says a clearer picture of the final payout will emerge in November.
