Global Dairy Trade prices decline for first time since November

The GDT price index was down 2.3 per cent at the March 5 auction, following a long rally.

The 2023-24 season started disastrously when prices plummeted to their lowest level in five years at auction on August 15.

The March 5 fall was led by the powders - with skim milk powder down 5.2pc and whole milk powder down 2.8pc.

Other commodities to record falls were butter, down 1pc, and mozzarella, down 0.4pc.

But some commodities showed more positive signs, with lactose up 4.8pc, cheddar 4pc and butter milk powder 3.7pc.

Westpac New Zealand chief economist Kelly Eckhold said the weaker auction was more in line with recent futures market trends.

"Chinese buyers pulled back a little and south-east Asian buyers picked up the slack," he said.

Analysts say the uncertain Chinese economy remains the key factor for global prices.

ASB economist Nat Keall said China remained a relatively muted presence in the global WMP market.

"While demand from other countries has helped offset some of that impact, we've previously warned there may be a limit to how high prices more in the absence of such a major importer," he said.

Mr Eckhold said Chinese demand remained around the 10-year average.

Chinese authorities had earlier this month laid out their targets for the economy this year.

They set their growth target at 5pc, which is in line with the 2023 target, but lower than average growth in the past 20 years.

"Interestingly, the Chinese authorities also set a target for inflation at 3pc - somewhat higher than the zero to negative outcomes seen of late," Mr Eckhold said.

"We suspect it will be challenging for the authorities to meet these targets without significant policy stimulus - which so far is modest.

"Hence, we suspect the operating environment for exporters to China will remain challenging."