Predictions about a volatile commodity like milk are tough to make, milk futures specialist Nigel Brunel says, as overall prices at the latest global dairy auction (GDT) overnight dropped by 2.4 per cent, ending a run of two straight increases.
New Zealand's main export, whole milk powder (WMP), was down 2.7 per cent as the average price per metric tonne fell to US$3223.
Skim milk powder prices dropped 1.4 per cent, while butter was down 3.6 per cent, butter milk powder down 10.3 per cent.
Cheese bucked the trend, up 1.9 per cent.
Analysts were tipping prices might rise because of the slow start to the New Zealand season.
In its latest update, Fonterra said August production this year was down 2 per cent on the same period last year.
However, it predicted production would pick up and stood by its 2017-18 forecast of total milk collection for the season of 1.58 billion kilogram of milksolids, which would be a 3 per cent increase over the previous season.
On the eve of the auction OMF director Brunel had picked a 5 per cent rise overall, led by WMP, with volumes at their seasonal peak.
Nearly all of the 20,980 tonnes of WMP on offer was sold, but buyers were not willing to pay more for it.
"I couldn't have got the GDT result more wrong. Goes to prove that predictions are very hard to make - especially about the future and GDT events," Mr Brunel said.
NZ ASB analyst Nathan Penny said despite the dip in prices overnight, the bank saw potential for overall prices, particularly for WMP, to push higher over coming months.
"We are continuing to keep an eye on the wet spring which has been saturating most of the country including the key dairy regions," he said.
"As long as the wet spring weather continues, it creates the risks that prices spike higher over coming months, if production at this important time of the year is impacted."
Mr Penny said despite milk fat prices slipping, butter and anhydrous milk fat prices remained "extremely" high compared with a year ago.
Global butter demand continued to surge, while supply was struggling to keep pace.
"With this dynamic in mind, we remain upbeat on the outlook," he said and remained comfortable with ASB's 2017-18 milk price forecast of $6.75/kg.
?AgriHQ analyst Susan Kilsby said WMP offer volumes had not changed much despite the poor start to the New Zealand milk production season, which may have given buyers the confidence they would not have to compete too hard to secure product.
At the auction two weeks ago, prices rose slightly by 0.9 per cent, making two consecutive increases.
There were 149 participating bidders in the latest auction, with a total of 37,990 metric tonnes sold.
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