At one stage, WMP prices had slipped by around 15 per cent, but dairy markets have calmed and begun to recover.
"This recovery follows the loosening of lockdown restrictions in key markets such as China and South-East Asia, with a subsequent improvement, albeit modest, in dairy demand and in turn prices," Penny said in a report.
Penny still expects that global dairy prices to soften as the global recession weighs on global dairy demand later in the year.
"Indeed, we have factored in for global dairy prices to weaken over the peak New Zealand production months as the extra dairy volumes combine with softening global demand," he said.
Global Dairy Trade prices ticked higher overnight for the second consecutive auction for the season.
Wholemilk powder prices lifted 2.2 per cent, while skim milk powder led the gains, rising 3.1 per cent. Overall, prices firmed by 1.9 per cent.
In response, NZX Milk price futures firmed to $6.42/kg from $6.25 just before this morning's auction.
That compares with Dairy NZ's estimate of breakeven for this season of $5.80 to $5.90/kg.
Dairy NZ said that for most farmers, a breakeven under $5.75/kg was achievable with careful planning.
It said there are many things that could influence the milk price over the next six to 12 months, and emphasised the importance of farmers reviewing their costs.
Fonterra's latest forecast is in a wide $5.40 to $6.90 range, down from last season's forecast range of $7.10 to $7.30.
