The main price support was for product to be delivered in August with wholemilk powder, anhydrous milk fat, skim milk powder and butter all up substantially, suggesting demand from a small number of buyers for short-term requirements.
It was a different story further out the curve where the likes of whole milk powder dropping by 4 to 6 six per cent across the other contract periods.
"All-up prices remain precariously placed and combined with NZ dollar resilience this means Fonterra's starting milk price forecast in May of $4.25/kg looks optimistic at this stage," Williams said.
"If recent auction prices were to persist then the milk price will see no improvement from the season that has just finished," he said.
There was 16,250 tonnes of whole milk powder available at this morning's auction - 56 per cent more than at the previous auction.
AgriHQ analyst Susan Kilsby said the drop in the whole milk powder price indicated that demand was not strong enough to absorb the higher volumes of product being offered without some price correction occurring. Offer volumes are forecast to continue to rise in the coming months, peaking in September.
ASB Bank rural economist Nathan Penny said he was sticking with is 2016/7 farmgate milk price forecast. "However, we note that any further temporary setbacks to prices or alternatively the absence of an improvement in prices over coming months will make our forecast increasingly difficult to maintain," Penny said.
Among the other products, butter milk powder prices dropped by 7.5 per cent to US$1552 a tonne at this morning's auction while butter dropped by 3.1 per cent to US$2828 a tonne.
Anhydrous milk fat prices rose by 1.1 per cent to US$3621 a tonne, and rennet casein firmed by 4.9 per cent to US$5227 a tonne. The average price across all groups was US$2345 a tonne.
