The average price fell 7.4% to US$2875 (NZD$4830) a tonne.
The price of whole milk powder, which strongly affects the payout for local farmers, fell to US$2548 a tonne, though prices for skim milk powder and butter also fell 5.2% and 3% respectively.
It follows a 4.3% fall in the previous fortnightly auction, with prices falling at most auctions this year amid softening demand from China.
Fonterra recently slashed its forecast milk price for this season and announced an even lower opening price for next season amid falling demand and lower global dairy prices.
Synlait then followed the co-op's lead, lowering its forecast milk price for suppliers to $7 a kilo of milk solids (kgMS).
NZX dairy analyst Alex Winning said the price declines were not surprising, given the lack of demand seen from China in particular in previous auctions and weak economic data of late.
"Concern over Chinese demand began to startle the market over the weekend, with economic woes out of the country questioning whether
buyers would return to the fold," she said.
Buyers from the Middle East were the only to offer a sense of relief at the auction, Winning said, off the back of recent Brent Crude oil rallies.
"From a macroeconomic perspective, there isn't any indication that supply is easing anytime soon, and with less confidence in Chinese buying power, there's very little to indicate a lift in commodity prices in the near future," Winning said.
