Over that run of increases, prices jumped 22.9 per cent and were about 20 per cent higher than a year ago.
All monitored products showed price increases at the most recent auction; the highest price gains went to whole milk powder, which jumped 4.3 per cent, butter 2 per cent, and cheddar 2.4 per cent.
ANZ economist Susan Kilsby said the bank had anticipated a 0.5 per cent lift, and the unexpected jump reflected China’s continued demand and steady supply from New Zealand.
“We had expected the momentum to ease at some point and obviously it hasn’t occurred yet.”
China’s economy had recovered better than anywhere else in the world from the Covid-19 pandemic, she said.
Some of the demand was also likely to be driven by buyers trying to build up supplies of dairy products given current pressures on supply chains, she said.
The impact of that was hard to predict but could result in sharp price drops in the future.
“Prices move down a lot quicker than they move up. At some point we would expect to see some correction but at the moment it’s certainly boding well for the current dairy season,” she said.
ANZ’s farmgate milk price forecast for the current season was sitting at $7.20, within Fonterra’s current range of $6.90 – $7.50, while Westpac was forecasting $7.50, and ASB $7.40.
Westpac economist Nathan Penny said the bank expected further price strength in the short-term, before moderating later in the year.
But 2021 was looking good for New Zealand agriculture, which was riding on its earlier resilience.
“Prices across a range of sectors are firm and getting firmer, with dairy leading the charge,” he said.
The surging Chinese economy, along with Southeast Asian growth would continue to underpin demand for New Zealand products, while the Covid vaccine roll-outs would also bolster demand from secondary dairy markets, he said.
ASB economist Nathaniel Keall described the dairy price lift as a “whopper” and said dairy prices had continued to surprise in the face of what the futures market was expecting.
Rising dairy prices were part of the broader surge in commodity prices and had been fuelled by hopes of widespread vaccination and greater US stimulus.
Talk of new commodity price “supercycling”, a commodity boom, had emerged, he said.