Whole milk powder prices fell for the third straight auction in a row, while skim milk powder prices rose.
The reaction was in line with the similarly modest agricultural market reaction to date, ASB rural economist Nathan Penny said.
The Brexit vote to leave the EU also did not change agricultural or dairy market fundamental influences, so markets were not expected to react much anyway, Mr Penny said.
Some of the whole milk powder price weakness was attributed to temporary local production strength.
Surprisingly, May production rose 2.5% compared to the corresponding month last year. However, over the season as a whole, production fell 1.5% and a further fall over 2016-17 was expected.
A sharp drop in the volume of Fonterra's Australian skim milk powder volumes was likely to have boosted SMP prices, he said.
Australian dairy production was falling sharply on the back of drought and the recent plunge in Australian farm-gate milk prices.
Westpac acting chief economist Michael Gordon said the auction result was "probably as good an outcome as could have been hoped for''.
World dairy prices were expected to remain "more or less'' flat over the next few months, and a more substantial lift in prices is not expected until late this year.
Northern hemisphere milk production finally appeared to be responding to low prices, but the bank still viewed that with caution.
The level of EU milk production had declined but it remained at a very high level, following the removal of the quota system last year.
Global demand remained subdued and Russia had extended its food import ban until the end of 2017, Mr Gordon said.
