BNZ economist Doug Steel summed it up when he said there was ''absolutely nothing to like'' in the auction, which saw overall prices plunge 10.7%. ''It was every bit as bad as we were braced for and then some.''
Prices were now 41% lower than a year ago and the lowest since the auctions began in 2008.
Key whole milk powder prices fell the most, 13.1%, from an already very low level.
Some prices were not published because product was sold at the opening price.
That was very rare and a sign of how weak the auction was, he said.
''If you thought dairy prices were ugly before, they are horrendous now,'' he said.
Both BNZ and Westpac have dropped their 2015-16 milk price forecast to $4.30, well below the cost of production for many dairy farmers.
Low prices for two seasons in a row would be a ''major challenge'' for all farmers, Mr Steel said.
Outram dairy farmer Duncan Wells said it was a matter of looking closely at budgets and involving other business partners, including the bank and key people such as accountants, to ensure they were best positioned to get through it.
''We've just got to hunker down and hope it doesn't last too long,'' Mr Wells, who has been in the industry about 20 years, said.
While they were questioning every bit of spending and deciding what was ''absolutely crucial'', they did not want to cut costs to the point of affecting their typical production curve.
In the long term, Mr Wells believed the outlook for the industry was positive and the current situation was a reminder ''that we do play in the global arena''.
Waipahi contract milker Simon Barber was not surprised to see such a big decline, given the global situation.
The flow-on effects would be huge as spending was reduced, but previous generations had been through similar situations and prices had ''come right''.
''The question is, how long is it going to be and what's going to happen in the meantime?'' he said.
As contract milkers, they got a fixed price, so the ''big crunch'' would be next season when the contract was renewed.
Mr Steel said it would hit New Zealand's economic growth, lower the terms of trade further and widen the current account deficit.
It also heaped more pressure on the Reserve Bank to cut interest rates.
Near-term dairy price indicators were poor, it appeared the supply chain was very well stocked and prices were likely to remain weak, he said.
Fonterra's board would consider its farm gate milk price forecast for 2015-16 on August 7, NZME. reported.
Westpac senior economist Michael Gordon said that forecast was now likely to be ''well below'' Fonterra's current estimate of $5.25.
Sustained oversupply and soft demand in the northern hemisphere were likely to have been compounded by fears of a fracturing of the euro zone and a knock to confidence in Chinese share prices, he said.
ASB has stuck with its $5 forecast for 2015-16, viewing the weakness of the last two auctions as temporary, relating to Chinese stock market and Greek concerns, and expecting further weakening in the New Zealand dollar.
Federated Farmers' latest farm confidence survey, released before the auction, moved further into negative territory, with most dairy farmers expecting their profitability to worsen.
Pessimism was reflected in spending intentions, with a higher proportion of farmers expecting to reduce spending.
Federated Farmers dairy chairman Andrew Hoggard said dairy farmers were ''going back to basics''.
There was a higher-than-usual culling of dairy cows, as they sought to decrease stock numbers.
Feeding cows grass was cheaper than buying in feed and there were reduced imports of feed such as palm kernel extract.
