Global dairy prices have risen for the first time in three months.
The average price at the fortnightly sale rose 1.5 per cent to $US4656/MT, after falling 2.9 per cent in the previous auction.
The price of wholemilk powder, which strongly influences the payouts for local farmers, was fractionally lower, dropping 0.3 per cent to $US4158/MT.
"It would seem that dairy commodity prices have bounced, and the market is ready to push higher again," NZX dairy analyst Stu Davison said.
The increase was the first since the start of March and lifted the global dairy price index off its low point for the year.
The volumes sold were down by nearly 12 per cent, which Davison said went nowhere near satisfying the demand evident in the auction, even with North Asian buyers, mainly Chinese, largely absent because of supply chain disruptions.
"My big takeaway from this event is the volume of demand on the auction, both butter and WMP (whole milk powder) opened the bidding with a high demand to supply ratio; much more product was demanded as was available."
"This is a great measure of the amount of demand that arrived at the auction, but at this time of the year, must be measured against the lower offer volumes. What is more impressive is that North Asian buyers were again obviously absent, but good support was registered," Davison said.
Other positive prices included butter, which rose 5.6 per cent to US$6068/MT, skim milk powder which was up 3 per cent to US$4240 and anhydrous milk fat gained 2.7 per cent to US$6201/MT.
Cheddar eased 3.6 per cent to US$5365 and sweet whey powder and lactose were not offered at this auction.
The positive auction stemmed a 16 per cent decline in auction prices since the start of March and underpinned Fonterra's forecast of a record payout for the current season to a midpoint of $9.30 per kilogram of milk solids, and a preliminary forecast for the just started season of $9 in a range of $8.25 to $9.75.