Economists are seeking to revise this season's milk price after another sharp fall in prices in the latest GlobalDairyTrade auction.
Overall prices slid 10.8%, with key product whole milk powder falling 13.3%. Other prices were also weak, with buttermilk powder falling 25.1%.
ASB has cut its milk price forecast to $4.60 and also dropped its forecast for 2015-16 to $6.20, while Westpac said its forecast of $4.90 was ''looking too high'' and would be revised in coming weeks.
Late last month, Fonterra held its forecast milk price for the 2014-15 season at $4.70 but lowered its dividend estimate range by 5c to 20c-30c per share.
ASB rural economist Nathan Penny said the latest auction result was seen as a further correction to the market's earlier overreaction to New Zealand's production outlook, which had turned out not to be as bad as markets first feared.
Rain had come to many parts of the country, easing the fears about the worst impacts of the drought, and, while production growth continued to slow, it was ''not falling off a cliff'', Mr Penny said.
With slowing global dairy production and demand expected to gradually improve, particularly in China where lower energy prices and interest rates should boost disposable incomes and, in turn, demand, prices were likely to drift higher as the year progressed, he said.
But risks were rising that the recovery took longer than was currently expected.
With more than 90% of this season's milk sold, further changes to this season's forecast were unlikely.
Next season was a ''different story'' and risks to ASB's $6.20 forecast were skewed to a lower milk price at this junction, he said.
April 1 marked the end of the European Union's milk production quota system which had been in place since 1984.
Westpac senior economist Michael Gordon said the removal of the quotas was likely to cap the upside potential for dairying returns in New Zealand.
But for the coming season, at least, it was more likely that low milk prices would suppress competition from the higher-cost producers in Europe.
The ANZ commodity price index rose 4.6% in March, led by dairy products, up 9.2%.
But much of that was a carryover effect into early March from the February rally in GDT auctions.
The last two auctions had seen all of that improvement unwound already, not boding well for next month's index, ANZ agri-economist Con Williams said.
One positive was a bounce in most meat and fibre product prices would hopefully prove more sustained, Mr Williams said.
