UPDATED 5.03PM World dairy prices went against market expectations and registered a 2.9 per cent decline at the latest Global Dairy Trade auction.

LISTEN ABOVE: Waikato dairy farmer Roger Blunt speaks to Rachel Smalley

Price falls were across the board, but wholemilk powder prices - which make up about 75 per cent of Fonterra's farmgate milk price - were only down by just 0.8 per cent to an average price of US$1,971 a tonne.

Futures market pricing suggested a 2 per cent increase in the index, and a 2 per cent rise in wholemilk powder prices.

The bigger falls were in anhydrous milk fat, down 6.5 per cent to US$3,014 a tonne, and butter milk powder, down 6.4 per cent to an average a $1,545 tonne.

This morning's GDT auction is not likely to have an influence on Fonterra's farmgate milk price for this season, which the co-op last week reduced to $3.90 a kg of milk solids from $4.15 previously.

A major overhaul of the dairy sector is being suggested.

A Reserve Bank report expects between $1 billion and $3 billion of loans to farmers will turn into bad debt.

Labour leader Andrew Little said the situation is clear.

"We are going to have to expect low dairy prices for some time to come. This is why I think it's crucial there should be a summit where all of the interested parties come together."

A rural economist said falling oil prices, combined with new measures announced by the EU Commission, prompted a wait-and-see approach in the Global Dairy Trade auction.

ASB's Nathan Penny said the EU Commission's laid out a whole raft of measures - some which may weaken and others which may strengthen prices - but buyers are holding off to see how it plays out.

He said other markets also continue to impact on dairy.

"In particular, oil prices dropped back under that $40 per barrel price they had been trading at last week. They're now down around $38. That weaker sentiment has spilled into dairy markets".