Global dairy prices plunged by 7.4 percent overnight at the Global Dairy Trade auction.

Whole Milk Powder, which has the biggest influence on Fonterra's milk price, dropped 10.9-percent.

It comes less than two weeks after the dairy co-op drastically cut its forecast Farmgate Milk Price - with the midpoint falling from $8 to just $7.

The result is unsurprising considering Fonterra was putting more product up for sale on the auction platform, their oversupply of milk in China and overall weak demand.

Federated Farmers Dairy Chair Richard McIntyre joined Mike Hosking to discuss how Fonterra has affected the market.

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