The GDT price index dropped 0.9%, including whole milk powder (WMP) down 0.5% and butter down 5.4%.

However, the ANZ world commodity price index rose 1.3% in May, its eighth consecutive increase, as all prices in the index rose – dairy, meat and fibres, horticulture, forestry products and aluminium.

The world price index at 354 is nearly 25% higher than in May 2020.

The NZ price index at 263.2 is 7.9% up for the year.

ANZ agricultural economist Susan Kilsby pointed out that aluminium prices are 65% higher than a year ago and put on 5.6% in May.

Forestry prices rose 3.3% in May and logs are now 25% more expensive than a year ago.

“Despite a slight easing, whole milk powder prices are up 54% on a year ago,” Kilsby said.

“The rise in the other categories of dairy has not been as dramatic. Growth in global milk supply will test demand depth in the coming months.”

Westpac senior agri-economist Nathan Penny says dairy prices have effectively trended sideways over the past five auctions.

The past NZ season had ended strongly for milk production, up 11% in April, month-on-month, and 2.4% year-to-date.

But he thought the Canterbury floods would delay milk production in the new season.

“Notably, many farmers have lost winter feed during the floods, with feed stores already low given earlier dry conditions,” Penny said.

“While this may not necessarily impact production levels from the spring, any additional adverse weather events certainly will.”

Penny predicted that high milk prices would boost NZ production in the 2022 season by 2%, despite compliance and regulatory pressures.