Westpac senior agri-economist Nathan Penny added 50c to put his estimate at $7/kg milksolids and BNZ senior economist Doug Steel went up 30c to $6.80.
The GDT indicator on October 20 rose 0.4%, including a similar small lift for whole milk powder (WMP) prices. The market has risen 6.5% during September and October.
NZX dairy analyst Amy Castleton says the revised milk price after the latest GDT results and the derivatives market response was $7.11, up 12c from the previous calculation in early October.
Milk futures prices have risen 3% from $6.77 to $6.95 for September 2021 contracts.
ASB is sitting at $6.75, ANZ at $6.50 and Rabobank at $6.35, with an indication that its forecast will rise in early December if the current market conditions prevail.
Penny says Westpac economists now expect dairy prices to hold at or around current levels for the remainder of the season.
It was a contrast with their earlier view that prices would weaken as the global recession weighed on dairy demand.
The Chinese economy had rebounded better than expected post-covid and was now on track to post modest growth in 2020, the only major economy to do so.
Also, economies in other key dairy markets in Asia were faring better than expected.
Steel says signs are emerging that Chinese consumption was following the industrial recovery that had been evident for some months.
“On the supply side, some pockets of dry conditions appearing in NZ raises questions around whether the strong start to the milk season can be sustained,” he said.
With recent positive developments looking sustainable, BNZ was encouraged enough to lift to $6.80, although there remained a wide range of possible outcomes.
Earlier in the month, ANZ agri-economist Susan Kilsby said growth in early-season milk in NZ and strong milk flows in other parts of the world had so far not dented buyer confidence.
“But as milk volumes lift and global economic conditions deteriorate, risks continue to be skewed to the downside,” she said.
Rabobank’s senior dairy analyst Emma Higgins said Chinese demand for WMP was noticeably higher than a month ago and compared with this time last year.
Yet milk production is increasing in many parts of the world.
Sometimes it was easy to forget in NZ that we are in the midst of a pandemic, Higgins commented.
“But Europe is moving through its second wave of covid-19 infections and governments are (re)imposing varying restrictions in the fight against the spread of the virus,” she said.
