International dairy prices showed signs of stabilising at this morning's GlobalDairyTrade (GDT) auction, with the GDT price index easing by just 0.3 per cent from the last sale in mid October.
The result built on a 1.4 per cent gain in prices at the last auction, which came after a near 50 per cent drop since February.
The average price at this morning's auction was US$2649 a tonne.
Wholemilk powder - New Zealand's biggest export - sold for US$2522 a tonne, up 1.6 per cent from the last auction.
Fonterra has said that wholemilk powder prices would have to reach US$3500 a tonne by March if its revised farmgate forecast of $5.30 a kg of milksolids is to be achieved.
The price of skim milk powder - another important commodity group for New Zealander producers - eased by 1.2 per cent to US$2457 a tonne.
Dairy prices have fallen sharply this year, due mostly to a buildup of inventory in China, the effects of a ban by Russia on imports of some food groups - mostly dairy - from some western countries, and increased production worldwide.
Bank economists have said that if market prices remained low, the farmgate milk price could fall to about $4.80 a kg this season, which would mean many farmers would not be able to break even.
At that level, the milkprice would represent $2.5 billion in lost export revenue, relative to a more "normal" price in the low $6 range, according to Westpac bank economists.
Among the other products, cheddar prices fell by 9.2 per cent to US$2728 and butter milk powder prices fell by 6.9 per cent. A total of 45,499 tonnes of product sold.
By Jamie Gray, NZME. business reporter