The ground under dairy prices is looking shaky this season but it's hoped the fall in the value of the New Zealand dollar will provide some safe footing.

Economists say downside risks to the dairy price outlook have increased in the past month due to trade tensions between the US and China. But they aren't yet uneasy enough to declare national milk price setter Fonterra's $7kg milksolids forecast for the 2018-2019 season in peril.

However, capital markets specialist Craig Ferguson of Australia's Antipodean Capital Management predicts New Zealand dairy prices could fall by 10-30 per cent and doesn't believe Fonterra's price will hold. Independent economist, former ANZ chief economist Cameron Bagrie believes a 10 per cent fall is on the cards.

Ferguson, in early 2015, forecast that New Zealand's dairy price slump would be severe and would last longer than the industry predicted. It endured for nearly three years. The ANZ, New Zealand's biggest rural lender, is forecasting a milk price of $6.75/kg for this season. The ASB is on $6.50/kg.

The average price at the latest Global Dairy Trade (GDT) auction fell 5 per cent to US$3232 per tonne, with whole milk powder, New Zealand's main dairy export, down 7.3 per cent.

The result was unexpected.

In July 2016 at the worst of the global price slump, the average GDT price sunk to US$2082 per tonne. Fonterra's milk price to farmers that season was $3.90. Farmers need close to $6/kg to break even.

Bagrie said there's more downside risk than up to the price outlook.

"The get-out-of-jail card is the New Zealand dollar. It's providing a really important buffer. My baseline from here is that dairy prices will be down 10 per cent. As to something larger, I'd be a little more circumspect.

"Ten per cent, maybe 15 per cent, is manageable given the fall in the dollar. It's gone from US74c to about US67c so the currency is off about 10 per cent and we're going to see that counterbalance.

"The issue is if these trade tensions really escalate, then watch out, and it won't just be commodity markets."

Melbourne-based Ferguson, formerly of ANZ Investment Bank, said the global data cycle probably peaked in January-February, which implied lower potential demand.

"Global commodity prices should peak if they have not already, dairy included," he said.

"Trade jitters are an issue but more important is abating global liquidity which reduces access to credit. Traders tend to destock when liquidity tightens and the New Zealand supply season is about to start."

Ferguson believes Fonterra's $7/kg price forecast is not sustainable.

"A modest 10 per cent GDT price fall would need a sub-US$60c Kiwi for the estimate to be stable and dairy (prices) tends to overshoot so a 10-30 per cent fall would be reasonable."

ASB senior rural economist Nathan Penny agrees the risk potential for dairy prices has increased amid trade tensions but says the bank is still "positive" about this season's milk price.

"The season started positively and we don't expect it (the price) to lose anything like 30 per cent, though 10 per cent is possible," he said.

"China has said it will retaliate when Trump puts his measures in place and those measures include dairy, so obviously that would be on US dairy exports to China, so that's a small positive for New Zealand dairy prices."

Dairying contributes about $8 billion annually to GDP.

Exports for the 2017-2018 season just ended were expected by DairyNZ to earn about $16b