ASB was expecting slightly firmer production growth of 4%. While that was more optimistic than Fonterra's forecast, it was not a significant enough difference to change the price outlook.
Fonterra continued to lose share to other dairy processors, which accounted for some of the forecast difference, Mr Penny said.
The New Zealand Dairy Companies Review, published in April, said Fonterra's market share had fallen steadily since its establishment in 2002, to its current 84%.
Westland and Tatua's market share remained much the same at 4% while new processors had grown to a combined 12% share.
Westpac acting chief economist Michael Gordon said global dairy demand continued to grow at a subdued pace, and stockpiles of milk powder remained substantial, especially in Europe.
Russia recently extended its ban on food imports from the EU until the end of 2018, though it was yet to make a decision on the ban from other Western markets which runs to the end of this year.
Whole milk powder bucked the trend in this week's GlobalDairyTrade auction, rising 2.6%, against an overall 0.4% drop. The result was in contrast with futures prices prior to the auction, which had pointed to WMP - a key product - being flat to down 2%.
Prices were in a ''holding pattern'', with the WMP lift effectively cancelling out the previous auction's 3.3% fall, and that pattern was expected to continue at least until spring, ASB senior rural economist Nathan Penny said. Meaningful New Zealand production data would be ''thin on the ground'' over coming months as production was very low over winter. June, July and August accounted for just 7% of New Zealand's annual production.
Fonterra had set its new season production growth forecast at 3%, but the first real test of that would not be until production ramped up in the spring. ASB was expecting slightly firmer production growth of 4%.
While that was more optimistic than Fonterra's forecast, it was not a significant enough difference to change the price outlook. Fonterra continued to lose share to other dairy processors, which accounted for some of the forecast difference, Mr Penny said.
The New Zealand Dairy Companies Review, published in April, said Fonterra's market share had fallen steadily since its establishment in 2002, to its current 84%. Westland and Tatua's market share remained much the same at 4% while new processors had grown to a combined 12% share.
Westpac acting chief economist Michael Gordon said global dairy demand continued to grow at a subdued pace, and stockpiles of milk powder remained substantial, especially in Europe.
Russia recently extended its ban on food imports from the EU until the end of 2018, though it was yet to make a decision on the ban from other Western markets which runs to the end of this year.
