The GlobalDairyTrade index, based on sales prices at the auction, rose by 1.3%, compared to last event two weeks ago.
Prices of benchmark whole milk powder rose by 1.0%, the first rise in prices seen so far this year.
The rise in prices was bigger than expected, with dairy futures market suggesting flat prices.
Ahead of the auction, Tobin Gorey suggested that the event would set the mood for prices going forward.
«The market, it seems, is looking for a lead from the auction,» he said.
Increased Australian pay-out
Last week Fonterra announced it has increased it average payout to its Australian farmers.
Fonterra will pay $5.20 per kilogramme of milk solid, in line with its forecast closing price for the 2016-17 season.
«Production has fallen across the major exporting regions, particularly Europe and New Zealand, and we’ve seen a significant decline in Australian milk supply,» said Fonterra Australia managing director René Dedoncker.
«This has helped to rebalance global supply, while demand has remained firm,» he said.
«As a result there has been a steady improvement in global dairy commodity prices and this is reflected in our farmgate price.»
Milk production recovers in New Zealand
But the fall-off in milk production is starting to stabilise.
Milk production in New Zealand was up by 2.9% in December 2016, compared to the same month in 2015.
This bucks a declining trend, which sees production down 1.8% between the start of the season in June and December.
Source: Agrimoney
Link: http://www.agrimoney.com/news/dairy-prices-edge-higher-at-globaldairytrade-auction–10423.html