The international dairy trade has started 2015 on a positive note with this morning's GlobalDairyTrade price index gaining 3.6 per cent since the last auction in mid-December.
The average winning price was US$2709 a tonne, up from US$2609 a tonne at the last auction, and prices were up across the board.
Whole milk powder prices - the most important product for New Zealand dairy producers and the key determinant of Fonterra's farmgate milk price - rose by a modest 1.6 per cent to US$2307 a tonne while other product groups put on bigger gains.
Last month, Fonterra cut its farmgate milk price forecast for the current season to $4.70 per kg of milk solids - down from previous forecast of $5.30 a kg - due to sharply lower market prices.
Combined with the previously announced estimated dividend range of 25-35 cents per share, Fonterra's cash payout is forecast at $4.95 to $5.05 a kg for 2014/15.
Fonterra's thinking centres on wholemilk prices recovering to their long-run average of around US$3500 a tonne.
Falling oil prices, geopolitical uncertainty in Russia and Ukraine, and subdued demand from China have all contributed to sharply weaker prices since the start of last year.
Skim milk powder - another major product for New Zealand producers - gained by 2.8 per cent since the last GDT sale.
Anhydrous milk fat prices gained 6.8 per cent, butter by 13.2 per cent and butter milk powder by 10.5 per cent.
Cheddar prices were up 3.2 per cent and rennet casein firmed by 4.2 per cent.
In total, 33,669 tonnes of product sold at auction.