An economist says the fall in global dairy prices will be cushioned by a drop in the value of the New Zealand dollar against its US counterpart.
Prices dropped more than 5% at Fonterra's fortnightly auction this week.
It was the third fall in a row and followed followed nine consecutive rises.
Volumes increased substantially from previous sessions when supply was tight due to the drought.
The New Zealand dollar has lost 7% since hitting a post-float high of US86.3 cents in mid-April amid signs of an improvement in the American economy.
BNZ economist Doug Steel says dairy prices are down 14% in the last three auctions and he expects them to keep falling, though the average price is likely be higher in the coming dairy season.
He says the New Zealand dollar has fallen slightly since the last auction, which will cushion the decline in world prices when converted back into New Zealand dollar prices.
"Where the dairy payout actually ends up is highly influenced by the balance between international prices in the auction and the New Zealand dollar."
Mr Steel says at this stage the payout forecast announced by Fonterra looks intact.
He says dairy accounts for about one quarter of New Zealand's merchandise exports and prices are still 54% higher than they were a year ago, auction to auction, so the trend is still positive.
Mr Steel says he expects the dairy industry will continue to be a strong support to economic growth over the coming 12 to 18 months.