Dairy prices dipped slightly overnight at Fonterra’s online global auction but the latest rural economic report suggests agricultural commodity prices will remain strong for the foreseeable future.

Last night the price of milk powder fell an average 2.4 percent to US$4,280.

Dairy industry commentators say this was to be expected after the market hit record-breaking highs in March and the outlook for the sector remains very positive.

The ASB’s Rural Economic Update says the dairy industry’s 2011 season payout is looking stable and even predicts there may be a small increase before the financial year is concluded.

The beef markets are also in great shape, with US prices at unprecedentedly high levels and, the ASB says, a diminishing herd size in the United States means supply factors will remain favourable for kiwi producers. 

The ASB report says current international dynamics also suggest the spring cattle market will be much stronger than normal.

It is a similar story for lamb prices with supply factors translating to great international prices and, the ASB says, it is hard to see prices dropping in the next six months.