Dairy product prices rose at the Global Dairy Trade auction, gaining for the seventh time in eight auctions, amid supply decreases.

The GDT price index increased 4.5 per cent to US$3,519, up from US$3,327 at the previous auction two weeks ago. Some 23,902 tonnes of product was sold, down from 27,735 tonnes at the previous auction.

Whole milk powder added 3.2 per cent to US$3,423 a tonne.

Last month Fonterra said it reduced its forecast milk volume for the 2016-17 season in New Zealand.

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"Tightening milk supplies in both New Zealand and Australia has put pressure on suppliers with some dairy companies struggling to meet contracted delivery times," AgriHQ dairy analyst Susan Kilsby said in a note. "This has left a few buyers with low supplies on hand putting some urgency into the market."

Still, "the lift was a little less than the market had anticipated," according to Kilsby.

At the latest GDT auction, butter milk powder jumped 13.3 per cent to US$2,623 a tonne, while cheddar climbed 11 per cent to US$3,697 a tonne.

Skim milk powder rallied 9.8 per cent to US$2,562 a tonne, while lactose advanced 4.6 per cent to US$787 a tonne.

Anhydrous milk fat rose 4.4 per cent to US$5,348 a tonne, while butter added 1.1 per cent to US$4,193 a tonne, and rennet casein edged 0.6 per cent higher to US$6,040 a tonne.

The New Zealand dollar last traded at 70.93 US cents at about 11.31am in New York, compared with 71.18 US cents at 5pm in Wellington the previous day.

There were 106 winning bidders out of 164 participating at the 18-round auction. The number of qualified bidders held steady at 510, the same as at the previous auction.