If troubles come in threes, drought is shaping up as the third member of an unholy economic trinity this year, joining a housing-led domestic slowdown and a US-led global one.

Drought was one of the factors that tipped the country into recession in 1998, coming on top of the Asian financial crisis.

Agriculture Minister Jim Anderton is to meet farming leaders next week to discuss the effect the continuing dry weather is having in several regions throughout the country. The National Institute of Water and Atmospheric Research says soil moisture deficits are extreme in Auckland, Waikato, King Country, South Taranaki, Wanganui, northern Manawatu, from northern Hawkes Bay to Wairarapa, and from central Marlborough to central Canterbury. Even parts of Southland are dry.

"These areas require good quantities of steady rain over several days to soak into the soil and revive pasture and river flows," NIWA says.

Its outlook for the next three months is for normal rainfall over the North Island and the top of the South Island but it expects below normal rainfall and soil moisture conditions for most of the South Island, and above average temperatures for the whole country.

ANZ Bank reminds us that the hot summer follows a difficult spring with cold and windy or wet and windy conditions limiting pasture growth in much of the country.

Milk production is plummeting, particularly in Waikato and the Bay of Plenty, which account for about 40 per cent of country's dairy herd, it says, and estimates of a 2 or 3 per cent rise in national dairy production this season are now looking optimistic.

With costs rising but production volumes under pressure, dairy farms' cash surpluses this season may only be 10 to 20 per cent above last year, the bank says, even with prices at very high levels.

And those prices show signs of having peaked.

ANZ's commodity price index dropped last month for the first time in 18 months, reflecting a 5 per cent fall in world dairy prices (though they are still 63 per higher than a year ago).

Meanwhile lambs are being sent to the works lighter than usual and the cull of ewes is being stepped up.

Drought is not just an issue for the farm sector.

It also matters for electricity consumers since most of the power we use comes from hydro schemes.

At a time of year when lake levels should be rising they are not.