World dairy prices have soared at the GlobalDairyTrade auction on Tuesday morning.
The GlobalDairyTrade Index increased by 11.4 percent to US$3327 per metric tonne, following an increase of 1.4 percent in the previous auction two weeks ago.
It was the second biggest increase in prices this year and was better than analysts had been expecting.
Prices for New Zealand's biggest dairy export, whole milk powder, surged by 19.8 percent to US$3.317.
The butter index rose by 4 percent, while the butter milk index dropped by 5.4 percent.
The auction was held as new figures show that milk production is down in New Zealand, Australia and Europe.
In late September Fonterra lifted its forecast payout for this season to NZ$5.25 per kilogram of milk solids. It also forecast earnings per share for the current financial year of between 50 and 60 cents.
That would mean a total payout available to farmers in the current season of between $5.75 and $5.85, before retentions.
Dairy New Zealand estimates the average break-even point for farmers this season is $5.05.