Dairy prices have reached their highest level since early February with a 3.6% increase in this week's GlobalDairyTrade auction - the fourth consecutive gain.
Whole milk powder prices recovered from the last of March's slump, rising 5.2% while very strong demand for milk fat continued to push anhydrous milk fat and butter prices higher.
Skim milk powder remained something of an unwanted by-product, with prices edging down 0.9%, Westpac economist Sarah Drought said.
While demand from China remained solid and was helping to put a floor under prices, dairy prices seemed to be responding to concerns about New Zealand supply because of recent poor weather, she said.
This season's production was ''largely done and dusted'' and it was not clear that next season's production would be significantly affected.