Dairy feeling bank pressure

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Some sharemilkers will still be feeling the heat this summer, despite the dairy industry's continuing recovery.

Of all sharemilkers who responded to the latest Federated Farmers banking survey, 19% felt they were coming undue pressure from their bank on their mortgage, 13% expressed dissatisfaction with their banks and 11% reported poor communication.

Those percentages were all significantly higher than those for farmers generally.

Bank satisfaction overall remained strong, with 81% either very satisfied or satisfied with their bank, up 1% on the previous survey in August, while 7% were feeling dissatisfied or very dissatisfied, also up one point.

Generally, those in the dairy sector were perhaps feeling less pressure than in August, but their industry counterparts in the sheep and beef and arable industries experienced a pick-up in pressure, although still below dairy.

Drought, tough market conditions and Brexit had added more uncertainty to the sheep industry and farmgate lamb prices had been affected by a persistent strong New Zealand dollar, Federated Farmers president William Rolleston said in a statement.

The dairy industry was still going through "an adjustment of sorts" and it remained the most vulnerable of all farming sectors.

It was no surprise the Reserve Bank continued to highlight dairy as one of the main risks for financial stability, Dr Rolleston said.

In ANZ's latest Agri Focus, economists said current market indicators were pointing towards a $6.40-$6.50 milk price in 2016-17, assuming recent GDT prices could hold through the remainder of the season.

ANZ had a slightly more conservative view of $6.25, based on some moderation of prices in the new year.

The increase in international prices was driven by tightening global milk supply and continued demand from China.