Global dairy prices continued their march upwards at auction on Tuesday night, as constrained supply underpins the market.
The Global Dairy Trade index was up 1.4 per cent, with all commodity groups posting increases.
"At this point in the season, a record-high farmgate price (in New Zealand) is practically guaranteed," NZ bank ASB economist Nat Keall said.
Although the key whole milk powder price was up 0.6pc, this was lower than the 6.0pc the futures market had been expecting.
"Still, with WMP prices already up 13pc since the end of winter, when they were already strong, that's thing to focus on here," he said.
"On that front, there is little to suggest that prices will be correcting in the near future."
Mr Keall said soft production in NZ in October and relatively soft European Union dairy exports were factors in the higher prices.
The bank has also lifted its forecast price for 2022/23 by NZ60 cents/kg to $NZ7.40/kg MS.
M Penny said the upgraded prices reflected a large downward revision to the bank's currency forecasts.
"Effectively, the lower forecast NZD/USD is likely to prove a windfall gain for farmers over this season and next," he said.
"Importantly, we expect the currencies in our key markets to remain firm against the USD, in contrast to the NZD."
But the record prices are not expected to last.
"We still expect global dairy prices to gradually fall from their peaks over 2022," Mr Penny said.
"As we mentioned in our previous update, we expect global dairy supply to rebound next year.
"And in turn, we expect this rebound will prove the main catalyst for the decline in global dairy prices."
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