The weaker New Zealand dollar is boosting New Zealand commodity prices in local terms, ASB senior rural economist Nathan Penny says.
The ASB Commodity Price Index had lifted 8.3% annually in New Zealand terms.
Also, the index sat only 5% below its record high set in 2011.
In comparison, the index was down 3.8% on this time last year in US dollar terms.
"For us, the fall in the dollar means we can now reconfirm our 2018-19 milk price forecast at $6.50 a kg/ms."
Fonterra last week dropped its forecast from $6.75 a kg/ms to $6.70.
Dairy auction prices had fallen about 9% in the past three months and had led the ASB to put its forecast "under review".
However, it was anticipated the weaker New Zealand dollar was enough to offset the fall in dairy auction prices.
Mr Penny noted the Chinese yuan had been even weaker recently than the kiwi.
As China was the largest export market for most New Zealand commodities, further yuan weakness — in the absence of commensurate weakness in the kiwi — posed a risk to the commodity price outlook, he said. BNZ senior economist Doug Steel said New Zealand exports were "firmly higher" than a year ago through a mixture of volume expansion and higher prices.
Horticulture continued to be a strong performer. All three components in New Zealand's case — wine, apple and kiwifruit — were showing positive trends.
Wine exports in the year to June were 2% higher than a year earlier, driven more by volume than price changes.
While not particularly fast growth, it did represent the 23rd year of continuous expansion.
Annual wine exports were now valued at more than $1.7 billion, he said.
Apple exports continued to perform strongly, building on success in recent years, Mr Steel said. Export values had pushed to a record high and well through the $700 million mark in the year to June — up 6% on a year ago.
Generally buoyant prices, combined with increasing volumes of new varieties earning premium prices, were underpinning value growth.
Further growth was expected, initially as the remainder of the bumper 2018 crop was sold and, over time, as the industry headed towards $1 billion in exports on expanding planted areas and as more trees came into production.
Sheepmeat exports had lifted in the past 18 months, and were up more than a quarter in the past year alone, he said.
It was big growth in a big sector and equated to an annual gain of more than $700 million.
Higher prices had been the main driver as lamb production remained generally restrained.
More mutton volume had added support, encouraged by high prices.
In the coming year, sheepmeat export values were expected to be similar to the past year as higher average pricing offset forecast lower volumes, Mr Steel said.
Lower volume was expected in the coming 12 to 18 months on an assumption lamb numbers this spring would be down 4% on last year along with the possibility of more ewe lamb retentions.
Wool exports were close to recent lows despite volumes lifting nearly 20% in the past year.
The latter was mainly a case of reducing elevated inventory of coarse wool rather than stronger underlying demand. Prices were well down during the year.