Dairy product prices climbed at the Global Dairy Trade auction, advancing for the sixth time in seven auctions, bolstered by a jump in whole milk powder amid lower supply.
The GDT price index jumped 11.4 per cent to US$3,327, up from US$2,965 at the previous auction two weeks ago. Some 27,735 tonnes of product was sold, down from 31,525 tonnes at the previous auction.
Whole milk powder soared 19.8 per cent to US$3,317 a tonne.
Last week Fonterra said it reduced its forecast milk volume for the 2016-17 season in New Zealand to 1,460 million kilogram of milk solids, 6.8 per cent below the volume collected last season, AgriHQ dairy analyst Susan Kilsby said in a note.
"Dairy markets reacted sharply to tightening milk supply in New Zealand," Kilsby said. "This positive GDT result will put upward pressure on milk price forecasts."
At the latest GDT auction, skim milk powder rallied 6.5 per cent to US$2,329 a tonne, while butter gained 4 per cent to US$4,146 a tonne.
Anhydrous milk fat increased 2.6 per cent to US$5,146 a tonne, while cheddar added 0.9 per cent to US$3,332 a tonne.
Meanwhile, lactose dropped 4.0 per cent to US$755 a tonne, while rennet casein fell 4.8 per cent to US$6,025 a tonne, and butter milk powder declined 5.4 per cent to US$2,248 a tonne.
The New Zealand dollar last traded at 71.69 US cents at about 12.27pm in New York, compared with 71.51 US cents at 5pm in Wellington the previous day.
There were 107 winning bidders out of 166 participating at the 17-round auction. The number of qualified bidders dropped to 510, down from 620 at the previous auction.