Farmers' hopes for a $10 a kilogram milk payout are under pressure after another price drop at the Global Dairy Trade auction overnight.

That's according to Rabobank Dairy Analyst Emma Higgins who said the drop confirmed that markets were spooked by the current volume of milk supply.

The price fall was the sixth time in a row, down 2.4 percent to its lowest level since September 2024.

Whole milk powder - key to farmers' payouts - dropped 2.7 percent to about US$3500 a tonne.

Higgins said farmers would now look to Fonterra in the coming weeks to watch what happened to the payout price.

"Ultimately, what we're likely to see over the coming weeks and months ahead is a continuation of ample supplies of milk for buyers," she said.

"Just given that here in New Zealand, we're largely doing okay in terms of milk production environment or settings.

"We've got milk production tracking 3 percent almost ahead for their season today compared to last season and the globe as well, there's still really cheap feed prices, which is protecting farmer margins even though prices might be starting to slip elsewhere.

With so much milk available for market, buyers really don't feel that sense of urgency to jump into the market and buy with gusto, she said.

"So, in the absence of really strong demands and extra milk flows, we're likely to see this trend of weaker commodity prices continue towards the end of Christmas."

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In September, Fonterra confirmed farmers would get a payout of $10.16 per kilogram of milk solids for the 2024/25 season.

For the upcoming 2025/26 season, Fonterra has a forecast midpoint of $10 per kilogram of milk solids, with a forecast range of $9 to $11 per kilogram.