The strong start to 2021 for dairy prices in the Global Dairy Trade auction has continued overnight, with a 4.8 per cent lift across the board.
The increase is the fifth in a row and falls hot on the heels of 3.9 per cent earlier this month.
Farmers will be pleased whole milk powder prices - which have the greatest bearing on Fonterra's farmgate milk price - rose 2.2 per cent to US$3380/MT.
Meanwhile skim milk powder - the second biggest "reference" product for Fonterra, jumped 7.0 per cent to an average US$3243/MT.
But it was anhydrous milk fat, with a decent amount of product on offer, showing the biggest increase of 17.2 per cent to an average US$5398/MT.
Results for other main commodity groups included a rise of 6.6 per cent to an average US$1173/MT for lactose, while butter increased by 4.4 per cent to an average US$4735/MT.
Cheddar was the only product to experience a slight dip - down 0.3 per cent to an average US$4082/MT.
A total of 29,606MT of product was sold, attracting 93 successful bidders over 21 rounds - a lot more activity than has been seen in recent times.
In a market update on December 4, Fonterra increased the midpoint of its forecast farmgate milk price for the 2020/21 season by 20 cents to $7.00, and lifted the bottom end of its range to between $6.70 and $7.30.
Fonterra chief executive Miles Hurrell remained cautious about a further lift in the short term, despite two positive GDT results to kick off 2021.
"It's a bit early to start talking about moving the milk price forecast at the moment. Clearly this result here - nearly 5 per cent up across the board – will have us doing the numbers on that pretty carefully," Hurrell told The Country's Jamie Mackay.
Listen to Jamie Mackay interview Fonterra chief executive Miles Hurrell on The Country below:
Pleasingly, demand was starting to pick up from key trading nations, and Fonterra continued to deliver product - despite global supply chain disruption due to Covid-19, Hurrell said.
"The team have done a sterling job ... really pleased to see us get products into our key markets."