ANZ lifts forecast milk price

This puts the forecast just above the mid-point of Fonterra's latest milk price guidance of $8.90-$9.50/kgMS.

ANZ agriculture analyst Susan Kilsby says farmgate milk prices have benefitted from both the sharp lift in global dairy commodity prices and the softer New Zealand dollar.

"Dairy prices lifted much faster than anticipated in January as the impact of tight global supplies for milk started to have a material impact," she says.

"Milk supplies in all of the major milk producing countries are either tracking behind last season or growing only modestly.

"This lack of additional supply is now being felt in the global markets."

Kilsby notes that the recent milk production data from New Zealand, supported by dairy company announcements, means buyers are now well aware that there will not be a lot of additional product available from New Zealand during the latter part of the milk production season.

New Zealand's milk supply is tracking 3.2% behind for the season to December, with production for the month of December down 5.5% on the same month last season.

Dry conditions throughout January mean milk supplies are likely to be curtailed for much of the remainder of the season, says Kilsby.