"The price rise at this auction confirms that a knee-jerk reaction to the volume announcement was the driver of the recent price fall rather than any fundamental change in global dairy market dynamics," ASB senior rural economist Nathan Penny said in a commentary.
Looking over February and March, emerging dry weather could put further upward pressure on prices, he said.
"However, it's still early days in the NZ summer and we maintain our 2019/20 production growth forecast at zero," he said. "In other words, we are noting the drought risks at this stage."
Among the other products on sale at the latest auction, skim milk powder prices gained 0.7 per cent to US$3036 a tonne and butter prices firmed by 5.5 per cent to US$4250/tonne.
Against the trend, anhydrous milk fat prices fell by 2.6 per cent to US$4821 a tonne.
Among the other non-reference products, rennet casein firmed by 4.7 per cent to US$9375, while lactose gained 0.5 per cent to US$806/tonne.
Fonterra's farmgate milk price forecast for the current season is for $7.00 to $7.60/kg, with a mid point of $7.30/kg - comfortably ahead of DairyNZ's estimate of break even of $5.95/kg.
For Fonterra, milk prices are its greatest input cost, so an even higher price would create an extra headwind for the company as it seeks a return it to profitability after last year's record loss.
Fonterra's milk price hit a record high of $8.40/kg in 2013/14, before slumping to $4.40/kg in 2014/15, and to $3.90/kg in 2015/16.
Unlike previous peaks in the commodities cycle, the New Zealand dollar has remained relatively low at around US66c, giving exporters an extra boost.
At last December's update, Fonterra said that a $7.30/kg milk price - if it comes to pass - would be the fourth highest milk price in its near two-decade history, representing a $11.2 billion cash injection for the economy.
