Dairy product prices rose 3.5% at Global Dairy Trade's auction, the rise followed a 4.5% increase at the previous auction and a fourth consecutive rise in prices.
The index for Fonterra's online dairy commodity auction is at its highest level since 4 June 2014, 50.1% higher than this time 12 months ago, averaging at US$3,622/t (£2,840/t).
At the auction, all product prices were up except for butter milk powder (-2.6%). Lactose prices increased the most with a 10.6% jump in prices.
The dairy futures market had pointed to 3% to 5% rise in whole milk powder (WMP) prices at this week’s Global Dairy Trade and the futures market was correct as WMP prices increased 4.9%.
Demand from China in the first nine months of this year for whole milk powder has improved significantly and China has imported almost 20pc more whole milk powder than it did in all of 2015.
And, this demand, may continue, with one recent outlook report saying that Chinese demand for dairy products will jump by as much as 40pc by 2020 and almost 70pc by 2015.
Westpac economist Anne Boniface told Radio NZ there was no doubt that fundamentals had moved in favour of dairy producers: "Global supply is tightening, and there are more positive signs on the demand front, particularly out of China."
For the period January to September, milk production in the EU was up 1.5% on the corresponding period last year with Luxembourg, Cyprus, the Netherlands and Ireland recording the highest increases.
