Milk prices across several commodities have risen at the latest Global Dairy Trade auction.
The average price rose almost 2.3% overnight to US$3873(NZ$6597). It followed prices holding steady at the last auction with just a 0.1% price increase two weeks ago.
In a note, New Zealand Exchange dairy analyst Rosalind Crickett said it was another bullish result for most dairy commodities.
"Sentiment in the market over the last couple of weeks remains centred around the same thing," she said.
"While global milk production may have been strong in the year-to-date out of most regions, record high temperatures in the Northern Hemisphere, paired with the potentially strongest El Niño weather on record for the Southern Hemisphere in the months to come, could change the supply side dynamic."
Adding to this, she said it was a key time for buyers to get orders over the line ahead of the festive season.
The important whole-milk powder price rose 3% to US$3591 (NZ$6116). It was the same for skim milk powder which rose 7.6%, hovering near 12-month highs seen in May this year.
Crickett said this was "in line with expectations" as there were concerns about future milk production.
"While Europe and the US most recent data showed continued growth, reports on the ground are depicting farmers are already starting to dip into winter feed reserves amid drought conditions."
Butter meanwhile was down 2%, and anhydrous milk fat was down 6%- attributed to ample global supply of milk fats.
Last week Fonterra lifted its 12-month butter volumes forecast by 4.7%, while US butter was production up 8.5% year on year in June and Europe's rose 5.4% in May.
Crickett said New Zealand milk production figures due out later this week will likely to confirm the year on year growth story, with on-the-ground anecdotes from farmers around the country as pasture conditions remain robust, and with plenty of supplementary feed to go around currently.
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