Milk production is on track to set a record this season as the risk of drought derailing it continues to recede.
Earlier in the season, an increasing chance of an El Nino weather pattern this summer was raised and the expectation was the associated dry conditions could crimp production later in the season.
Yesterday, ASB senior rural economist Nathan Penny said relatively healthy soil moisture levels suggested production should "kick on'' over the next few months.
In December, production was 6.1 per cent higher than 12 months ago and, for the season to date, it was running 5.2 per cent ahead of the 2017-18 season.
ASB has reconfirmed its 2018-19 season production growth forecast of 5 per cent and was more bullish than many other forecasters who were generally forecasting nationwide production growth in the 3 per cent -4 per cent range, he said.
But that forecast translated into a more careful milk price view.
ASB was sticking with its 2018-19 Fonterra forecast of $6kg for now, and suspected the recent run of solid dairy auction results would "soon run out of steam''.
The ASB commodity price index posted solid gains in the week ending January 18, lifting 3 per cent and 1.6 per cent in NZ dollar and US dollar terms respectively.
Dairy prices drove most of the gains in US dollar terms, consistent with the firm GlobalDairyTrade auction result.