"We are not saying that this is a turning point, or that it's going to put a floor under things, but it is a very encouraging result, especially given the global backdrop," Bank of New Zealand senior economist Craig Ebert told APNZ.
Con Williams, rural economist at ANZ National Bank, said it looked like China had re-emerged as an active buyer.
The auction showed prices were strong across the board, with near-term delivery contracts registering solid increases.
Milk powder prices moved up, with skim milk powder (SMP) rising by 21.3 per cent and wholemilk powder (WMP) increasing by 8.5 per cent.
Anhydrous milk fat (AMF) prices bounced off their recent lows, rising by 24.4 per cent.
AMF had previously been trading at a discount to butter on a milkfat equivalent basis, Williams said.
The results suggested purchasers were looking to buy SMP and AMF in combination to use in food manufacturing, he said. Lower volumes on offer - as the New Zealand season came to a close - would have helped prices along, he said.
"However, reported lower production of domestic SMP in China and reduced imports in recent months suggests Chinese purchasers returned to the market en masse last night," he said in a commentary.
Fonterra last month cut its forecast payout for the 2011/12 season by about 4.5 per cent to $6.45-$6.55 a kg of milk solids. It has made an initial forecast for the new season of $5.95 to $6.05, made up of a milk price of $5.50 per kg of milk solids and an added dividend of 45c to 55c.
Fonterra chairman Sir Henry van der Heyden said at the time that prices had softened because there was too much supply.
"We think that supply and demand should move more into balance later in 2012 which may help ease the downward pressure on prices," he said then.
The next auction is on June 19.
