Dairy product prices increased at the Global Dairy Trade auction, rising for the second time in a row amid optimism about the outlook.

The GDT price index advanced 1.6 per cent from the previous auction two weeks ago to US$3,005. Some 22,642 tonnes of product was sold, up from 22,498 at the previous auction.

Whole milk powder rose 2.4 per cent to US$2,924 a tonne.

"Buyers will be aware that New Zealand dairy farmers are having a strong finish to the production season which means there is extra milk powder coming on line, so in this environment it is very positive to see whole milk powder prices creeping back up," AgriHQ dairy analyst Susan Kilsby said in a note.

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"The prices achieved were better than expected," Kilsby added.

At the latest GDT auction, rennet casein jumped 6.9 per cent to US$6,260 a tonne, while anhydrous milk fat gained 2.5 per cent to US$5,936 a tonne.

Lactose increased 2.2 per cent to US$927 a tonne.

Meanwhile, butter milk powder slumped 12.2 per cent to US$1,588 a tonne, while cheddar dropped 4.4 per cent to US$3,288 a tonne.

Butter declined 1.6 per cent to US$4,751 a tonne, while skim milk powder slipped 0.8 per cent to US$1,913 a tonne.

"The market for [skim milk powder] continues to be pressured by the huge volumes of product stored in Europe," Kilbsy said. Cheddar "is also under pressure with strong competition from European suppliers."

The New Zealand dollar last traded at 69.74 US cents at 12.44pm in New York, compared with 70.14 US cents at 5pm in Wellington the previous day.

There were 118 winning bidders out of 157 participating at the 13-round auction. The number of qualified bidders rose to 537, up from 533 at the previous auction

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