Keall says the 2.1% drop in whole milk powder prices in the latest Global Dairy Trade (GDT) auction should not be of concern.
He points out that WMP prices have soared 23% this year alone and are up more than 50% on historical averages.
Therefore a wee dip is all "a bit much of a muchness" - particularly given the 1.6% lift in skim milk powder prices.
Keall says SMP prices, which have underperformed WMP, show demand for powders is still strong.
"The same is true of butter prices, which had been on a massive bull run over the past dozen auctions," he says.
"And, of course, it's a mistake to get too hung up the auction-to-auction swings - pay attention to the broader fundamentals.
"On that note, market fundamentals still support prices holding their ground or advancing further in the near term. There still isn't much sign that tight global supply conditions will ease with any alacrity."
Stretched capacity and rising costs pressures remain constraints on output globally, while in much of the southern hemisphere, milk producton is down thanks to unfavourable weather conditions.
Keall notes that in some parts of the Waikato dairy heartland, output is still running about 12% behind year-ago levels.
"The good news for farmers is that a record milk price is already locked-in for the current season, and we've got a good starting point in the offing for 2022/23."
Westpac senior agri economist Nathan Penny says the latest GDT result partially reduces the upside risks to its farmgate milk price forecasts.
But Westpac is sticking to forecasts of $9.50/kgMS for this season and $8.50 for the next season.
Penny says the latest GDT results showed that "something does go the other way".
He believes a softening of demand in China is responsible for the price dip.
"An Omicron outbreak and surging Covid case numbers in China has introduced uncertainty around global dairy demand in the world's larfest dairy market.
"Indeed, the fact that WMP and butter posted the largest price falls points to conditions in China as being the key development for dairy markets.
"Recall that New Zealand is the largest exporter of WMP and butter to China, so any factors affecting demand there will soon be reflected in these prices on the auction platform."
In contrast, SMP and cheddar prices continued to rise.
Penny says NZ is a smaller exporter of these products, with the EU the dominant exporter.
"As a result, the price rises for these products suggests that the Ukraine-Russia conflict and its impact on grain feed prices is continuing to put the squeeze on EU dairy production."
