Commodity prices surged in March, posting the third strongest monthly rise in 27 years, with a strong jump in dairy prices and cow and sheep pelt prices.
The ANZ Bank's commodity price index gained 7.4% in March, compared with the previous month.
ANZ economist Steve Edwards says the index is now only 6% below its record high in April 2011, driven largely by dairy prices.
"We've seen whole milk prices lift by 23% ... skim milk prices rise 11%, cheese prices were up 5%, casein prices were up 1% - that's really a reflection of what's happened with the drought that's hit the country."
Ten of the 17 commodities measured improved, including prices for wool, logs and beef, while only two eased back - lamb and aluminium prices.
Mr Edwards says further out there's a structural shift with more demand coming from some Asian countries - particularly China - and parts of the Middle East .
"They're starting to demand more of our goods and that's pushing up the price. There's less and less of, in particular, the proteins, around for the people to buy."
Some wool is being sold in India, but he says there is growing demand for sheep meat, especially in China.
"Looking out past the drought, things are going to pick up. So it might be a short term slowdown, but past the next few months, things are looking promising."