Prices in the latest Global Dairy Trade auction, held overnight, have once again landed firmly on the side of dairy farmers, with a 4.3 per cent increase across the board.
Crucially, whole milk powder - which has the biggest influence on Fonterra's farmgate milk price - lifted 2.7 per cent to an average US$3921/MT, building on a 1.5 per cent increase at the previous auction and once again moving towards the US$4000/MT mark seen earlier this year.
Meanwhile skim milk powder - Fonterra's second biggest reference product - spiked 6.6 per cent to an average US$3626/MT; an increase of US$262/MT and further boost from the 2.5 per cent lift last auction.
Cheddar, which rose 2.9 per cent in the last auction, experienced the most dramatic increase - up 14.1 per cent to an average US$5058/MT.
Butter and anhydrous milk fat both experienced healthy lifts - increasing 4.7 per cent to an average US$5350/MT, and 4.2 per cent to an average US$6384/MT, respectively.
Lactose backed up a 5.9 per cent rise last time with a smaller 1.6 per cent lift, to an average US$1272/MT, but with very little product traded.
Butter milk powder, which is not always offered, fell 3.8 per cent to an average US$3513/MT.
Sweet whey powder was not offered at this event.
On May 26, Fonterra announced an opening forecast Farmgate Milk Price range for the 2021/22 season of NZD $7.25 - $8.75 per kgMS, with a midpoint of $8 per kgMS.
Last month, the co-op increased and narrowed this to NZD $7.90 - $8.90 per kgMS, with a midpoint of $8.40 per kgMS.
The strong result was already having an impact, Fonterra's chief financial officer Marc Rivers said.
"Just the event last night put $173 million into the New Zealand economy," he told The Country's Jamie Mackay.
Global demand was a key driver behind the result, with "good participation from lots of different geographies last night," Rivers said.
Supply was also having an effect, with "quite tight" conditions in the Northern Hemisphere and "a sluggish start" in New Zealand.
For example, the leap in skim milk powder was a result of these Northern Hemisphere supply constraints which was causing low stock.
"We're seeing buyers coming in from North Africa and the Middle East pushing the prices up."
Also in today's interview: Rivers talked about inflation's effect on the price of milk and whether Fonterra would raise its midpoint milk forecast price.