New Zealand dairy exporter Fonterra slashed its milk payout forecast to a six-year low yesterday as global dairy prices tumbles, and said a Russian ban on dairy imports would keep global prices volatile in the coming months.

The Russian ban, imposed in retaliation for global sanctions over the conflict in Ukraine, is raising supply as European countries divert sales from one of the world's largest cheese importers.

Fonterra is building its branded presence in China a year after a product recall there as well as in other Asian countries resulted in a ban on some of Fonterra's ingredient products and a resulting NZ$30 million hit from contractual penalties.

Those costs contributed to a 76 per cent tumble in net profit to NZ$179 million for the year ended July.