Worsening dry weather across many parts of the country could push dairy commodity prices up over the coming months, says a rural economist.
Prices continued their positive start to 2020 at the latest global dairy auction, lifting 1.7 percent with average prices sitting at US$3434/t.
The auction saw increases across all dairy commodities except anhydrous milk fat, with similar overall volumes sold compared with the previous event.
It was the second consecutive lift in prices at the auction, and likely due to a lift in demand from North Asia and Middle East, said analyst at NZX dairy derivative market analyst, Robert Gibson.
Meanwhile ASB senior rural economist Nathan Penny said the dry conditions in key dairying regions could push prices higher in the months ahead.
"Looking over February and March, emerging dry weather could put further upward pressure on prices.
"However, it's still early days in the NZ summer," said Penny.
Penny said auction prices had now largely recovered the lost ground at the end of 2019.