Prices have risen for the second time in a row, during last night's Global Dairy Trade (GDT) auction, with the index up 2.2 per cent across the board.
Whole milk powder prices - which have the biggest bearing on Fonterra's farmgate milk price - inched up by 1.7 per cent to once again break the US$3000 per tonne mark, at US$3041.
But it was butter milk powder (BMP) and butter at the forefront of the lift, with BMP jumping 9.1 per cent to US$2569/tonne and butter not far behind - up 8.4 per cent to US$3561/tonne.
Skim milk powder - Fonterra's second biggest reference product - bucked the trend with a 0.9 per cent fall to US$2865/tonne.
Among the other products on offer, lactose took a significant tumble - down 7.4 per cent to US$1182/tonne, while anhydrous milk fat rose 5.4 per cent to US$4131/tonne and cheddar lifted 0.4 per cent to US$3694/tonne.
Last month, Fonterra settled on a $7.14/kgMS payout for the 2019/20 season, while the forecast for the current 2020/21 season remains unchanged in a $5.90 to $6.90 per kg band.
Fonterra chief executive Miles Hurrell told The Country's Jamie Mackay he was "really pleased" with the result, especially butter prices.
"Fat's been a bit soft actually to be fair for the last few events, so really nice to see that the demand has come back with a bit of vengeance actually," he said.
There was a good product spread across global markets, including South East Asia and the Middle East, but China dominated, with "roughly 25 per cent of our milk going there," Hurrell said.
Financially, this year had been good to Fonterra, but Hurrell remained cautious about predicting this season's payout would "start with a seven".
"We'd have to see a lot change between now and the end of the season to get a seven … I think $6.40 is our midpoint so we're still sticking with that."
"A couple of the good events like we've seen last night will help but the exchange rate also plays a part so we'll need to watch that carefully of the next couple of months."
"As we sit here today, $6.40 midpoint, $6.90 upper end we still feel comfortable about that."