Dairy prices rose 3.6% at the Global Dairy Trade auction overnight, slightly against expectations and rising for the fourth consecutive time.
Prices of whole milk powder (WMP) have risen 5.2% to $3,233/t at Tuesday's GDT auction in New Zealand. WMP is New Zealand's most important product.
The recent gains are mostly due to increased output from Italy, Poland, France and the UK.
"Buyer demand was robust," AgriHQ dairy analyst Susan Kilsby said.
"There was strong participation in the auction by buyers from North Asia," according to Kilsby.
"A lack of profitability in China's own dairy farming sector has limited expansion of some farming operations and is expected to have some impact on their domestic milk supply."
The auction results can affect the New Zealand dollar as the dairy sector generates more than 7 percent of the country's gross domestic product.
Skim milk powder "prices remain under pressure due to the massive stocks of this product that have built up in Europe," Kilsby said.
"The SMP offered by Fonterra from both New Zealand and Australia achieved a small premium over equivalent product offered by European dairy company Arla Foods."
