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Emma Higgins says she is "pleasantly surprised" by the latest Global Dairy Trade auction result.

Rabobank's dairy analyst confessed to The Country's Jamie Mackay that the bank expected "a little bit of price recalibration over this period of time".

Dairy product prices rose 2.7 per cent after four consecutive declines and whole milk powder prices - which have the greatest bearing on Fonterra's farmgate milk price, leapt 3.6 per cent to US$3074 a tonne.

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However, it's not all good news said Higgins, who is keeping a wary eye on high levels of inventory building up in China.

Listen below:

"What we are concerned about is the rate of Chinese purchasing and what might happen over the coming months"

"China obviously is our largest export market and what we've seen over the last three months are record exports across from New Zealand into China".

While end demand is steady, Higgins said "the Chinese have over purchased" and "there is a little bit of stock building".

This coupled with local production improving in China will lead to a price recalibration "over the next couple of weeks, if not months".

Also in today's interview: Higgins says she is still sticking to her $7.15 farmgate milk price for the upcoming 2019/20 season.