Dairy prices have shot up to a fresh seven-year high in the overnight global auction.
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Photo: RNZ / Rebekah Parsons-King

The average price at the auction rose 15 percent to $US4231 a tonne.

The increase compares with a 3 percent rise at the last auction two weeks ago.

The price of wholemilk powder, which strongly influences the payouts for local farmers, increased 21 percent to $US4364 a tonne.

Almost all other commodities jumped in price, including butter, which increased 13.7 percent to $US5826 a tonne on average.

NZX senior dairy analyst Amy Castleton said this was definitely a higher result than anyone expected. Some analysts were predicting a lift, but only of 3 to 4 percent.

Castleton said it had been a hotly contested auction, lasting almost three hours, with just 86 winning bidders over 23 rounds.

There was strong demand out of North Asia with increased buying compared to the same time last year.

Purchasers were generally buying up as there was a need for product to deal with Covid-19 related shipping delays, Castleton said.

The main dairy companies have recently narrowed their forecast payouts to farmers for the current season to above $7 per kilogram of milk solids.

Last month Fonterra lifted its forecast farmgate milk price range to between $6.90 and $7.50 per kilogram of milk solids.

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