ASB has trimmed its milk price forecast by 25c to $6.25c on the back of another fall in global dairy prices.
This week, prices dropped 0.3 per cent and overall prices have now fallen in nine out of the last 10 auctions - down 15.9 per cent over that period.
Individual product results were more mixed: key whole milk powder dipped 0.9 per cent while milk fat prices were firm as butter prices rose 2.4 per cent. Skim milk powder prices were unchanged.
The recent auction falls came as New Zealand production continued to show significant strength, ASB senior rural economist Nathan Penny said.
Season-to-date production was more than 5 per cent ahead of the same time last season while Fonterra had lifted its forecast milk collections growth forecast from 1.3 per cent to 3 per cent.
Mr Penny noted Fonterra was losing market share and its collections forecasts tended to be on the conservative side.
ASB has doubled its 2018-19 production forecast from 2 per cent to 4 per cent. After three seasons of declining production, it was on track to set a record high.
Cashflows were positive and farmers were beginning to put the dairy downturn behind them. That meant they were spending more on maintaining pastures, through fertiliser application and on animal health. That spending was then translating into more production per cow.
