Mixed signals have emerged from the global dairy market over the past two weeks.
Fonterra has just cut its forecast payout by 30c for the 2012-13 season to $5.65-$5.75 per kg of milksolids.
ASB said in its latest commodities report that dairy production in the southern hemisphere was off to a good start, which would take some pressure off prices. "Even news from the drought-stricken US indicates that, while production is slowly declining in response to higher feed costs and hot temperatures, despite a very hot and dry July, production remained almost 1 per cent above July 2011 levels," ASB said.
Overall, the GDT trade weighted index was up 4.1 per cent over the past four dairy auctions, underpinned by a 7.8 per cent rise on August 15.
Agricultural economists said there was no need for farmers to panic just yet.
They point out the season - the business end of which occurs in September, October and November - has a long way to run.
The big question facing the global dairy market is the US drought and its likely impact on world supply and demand in the long run.
On the corporate front, The Warehouse's annual result for the year to July 29 is due on Friday.
The Warehouse has said its strategy of refurbishing its stores was taking time to translate into profit growth.
As a consequence, the company has kept its guidance for 2011-12 at $62 million to $66 million, down from a previous guidance of $70 million and from its 2010-11 profit of $76 million.
The Warehouse has suffered modest earnings declines in recent years and has had to face increased competition from the so called "big box" retailers, such as Bunnings.
Other challenges have come in the form of the category killers - the retail chains that specialise in one particular line. There has also been increased competition from online shopping, and demographic changes have presented a challenge for the company. On top of that, the retail environment has been difficult, in line with a very subdued economy.
Last year, Ian Morrice stepped down as managing director and was succeeded by Mark Powell as the group's new chief executive.
The Warehouse has been trading as a publicly listed company since 1994.
In the past two years the company has failed to grow its top line sales and market share.
Sir Stephen Tindall set the company up and he remains by far the company's biggest shareholder, in his own right and through the Tindall Foundation.
Shares in The Warehouse last traded at $2.85, down from $3.43 this time last year.
Across the Tasman, investors will have Australian gross domestic product data for the June quarter to consider on Wednesday, after a surprisingly strong surge in the March quarter led to a 4.3 per cent increase for the March year.
While doubts have emerged about the sustainability of the Australian resources boom, economists still expect to see a strong June quarter outcome.
The Australian mining boom will peak in 2014 but the non-resources sector will then drive growth, according to industry analysts BIS Shrapnel.
The magnitude of the downturn in mining would determine the impact on the rest of the economy, BIS Shrapnel said.
