Fonterra, the world's largest dairy exporter, said on Monday it has reassured its global customers that New Zealand dairy products are safe following the discovery of traces of a potentially toxic substance in milk samples.

The New Zealand firm said its testing had found "minute traces" in some of its products of dicyandiamide (DCD), a chemical used in fertilisers to prevent them from soaking into rivers, which can be toxic in large amounts.

Reports of the DCD detection prompted Taiwan, Chinese mainland and Malaysia to examine their dairy imports at the weekend, local media in those areas reported.

Fonterra, which was linked through a Chinese subsidiary to the 2008 melamine-tainted milk scandal in which at least six children died, said in a statement it had assured its customers that the detected DCD levels were no threat to human health.

"Customers are satisfied with our answers and the anxiety is dying down," Chief Executive Theo Spierings said later on Radio New Zealand, describing reports questioning the safety of New Zealand milk as "rumours and speculation".

He said the DCD levels found in tests last year were "100 times less than European standards".

The fertiliser companies making the product have suspended its sale. Fonterra has been working with the government and the industry since last November to resolve the issue, Spierings said.

Fonterra is New Zealand's largest company with revenues of around NZ$20 billion ($16.8 billion), and is looking to expand in Asia to tap into the region's growing demand for dairy goods.

More than 90 percent of milk collected in New Zealand is exported, mainly for use by other firms as an ingredient in everything from infant formula to cheese on frozen pizzas.

The news prompted slight selling in the New Zealand dollar late last week, while also weighing on the price of Fonterra's shareholder fund.

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(Agencies)