International dairy prices rose 2.1 per cent at the latest GlobalDairyTrade (GDT) auction, bringing with it an unwelcome gain in the already strong New Zealand dollar.
According to DairyNZ, a recovery in wholemilk powder prices to US$2400 ($3520) a tonne, coupled with the Kiwi falling to US64c, would allow its break-even estimate of $5.25 per kg of milk solids to be met.
While the GDT price rise - against market expectations - was encouraging, the currency is still not playing ball, rising by third of a US cent on the back of the auction result.
"The currency is certainly not helping the farmers' cause, that's for sure," ANZ senior foreign exchange strategist Sam Tuck said. "We had a December rate cut and a March rate cut, and the Kiwi is higher than where it was [last year]," he said.