Whole milk powder took the deepest dive, down 7.5 per cent compared to the last auction two weeks ago. It was the largest fall for the product since March 2017.

Skim milk powder fell 4.6 per cent, cheddar cheese prices slid 5.3 per cent and butter milk powder slumped 6.5 per cent.

Butter itself was down 2.8 per cent. On the positive side, anydrous milk fat was up 3 per cent and lactose rose 5.7 per cent.

While auctions have been lower as recently as December, Rabobank said it raised a question around how stable the demand from China for our dairy products was.

Demand in China had appeared to be quite strong after the country’s lockdown but both foodservice and grocery/retail demand had shrunk in June.

This suggested that what had seemed like consumer-led demand was due to ”a shift in business planning,” with companies carrying more stock than normal to ensure food security.

Rabobank said that as domestic production in China combined with softer consumer demand, Chinese demand for dairy exports could soften.

Other factors to watch were weakening economic growth out of the US and Europe. Cheese prices in US were in ”freefall” and skim milk in both the US and China were down.

”Today’s GDT event does not necessarily mark the end of price support for New Zealand dairy products, but it is aligned with Rabobank’s broader view that the road ahead will be bumpy.”