The Bank of New Zealand (BNZ) has increased its milk forecast for 2020-21 to NZD7.40/kg milk solids (ms) vs. the previous NZD7/kg ms, per Bloomberg.
The BNZ analysts note that the NZ GDT prices have risen to around 13% YoY, at their highest since 2014, due to the increased Chinese demand and drier weather conditions in the South Pacific island nation.
However, the risks to the upbeat forecasts for milk prices include increased northern hemisphere milk production and escalating coronavirus concerns.
The upward revision to the milk forecasts by BNZ is likely to provide extra legs to the kiwi, which is benefitting from the upside surprise in the NZ jobless rate, upbeat Chinese Caixin Services PMI and US stimulus-led risk-on mood.
The NZD/USD pair currently trades at 0.7218, sitting at the highest levels seen in three days while adding 0.38% on the day.