Radio New Zealand - Te Reo Irirangi o Aotearoa

Whole milk powder prices have fallen by 3% since last month in Fonterra's latest on-line dairy auction on Wednesday night.

The company says the result reflects good customer interest, but also a continued wariness about paying too much in an uncertain environment.

The average price dropped to $US1829 per metric tonne, compared with a month ago. It follows a 12% decline in June.

Global dairy trade managing director Kelvin Wickham says consumers appear to be taking a conservative approach to purchasing as they try to second-guess when an inevitable increase in demand and prices will occur.

The auction reflects a weak demand for milk powder in Europe and the United States and a large international stockpile of milk solids.

Fonterra Shareholders Council chair Blue Read told Morning Report that demand has not dropped - just the price.

He said nobody likes to see the price come down, but it's very early in the season so things could change "quite dramatically" during the year.

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The fall comes two months after Fonterra lowered its forecast payout to dairy farmers by 12.5% to $4.55 per kg of milk solids for the 2009/10 season, because of weaker commodity prices and a higher New Zealand dollar.