More falls in dairy prices are expected in the next few months, but futures market pricing suggests a mild bounce-back might take place at tomorrow's GlobalDairyTrade auction.
ASB Bank economists expect dairy prices to remain weak for two or three months because of higher New Zealand milk production.
At the last GlobalDairyTrade auction early this month, prices were pared back to their lowest level since mid-2009.
"With the end-of-season production quite strong, dairy markets will need time to absorb the extra New Zealand product," ASB said. "As a result, we expect dairy prices to remain weak for another two to three months."
Futures market pricing suggests about a 5 per cent rise for whole milk powder and skim milk powder prices. One futures trader said the auction could see prices flatten or perhaps bounce back a little.