The rise in prices at the latest GlobalDairyTrade auction was a result of Fonterra's decision to reduce the amount of product on offer.
The GDT price index rose 14.8 percent. Whole milk powder, which is a major product for Fonterra, rose 19.1 percent on average, to US$1,856 per metric tonne.
That is a relief for Fonterra and its farmers. They had watched as prices fell for 10 auctions in a row.
AgriHQ analyst Susan Kilsby says that ahead of the auction Fonterra reduced the volume of whole milk powder (WMP) on offer by 33.5 percent, compared with its earlier forecast.
"This hefty reduction in the volume available on GDT was the trigger required to turn market sentiment."
But prices will need to continue to rise if Fonterra is to avoid having to cut the forecast payout again from its current prediction of $3.85 per kilogram of milk solids. That forecast had been cut from an initial forecast of $5.25.
Previously around a third of all of Fonterra's production was sold through the auction. But the cooperative's magaing director of global ingredients Kevin Wickham has said: "I expect that number to go down more toward 25 than 30."
Fonterra will still need to find somewhere to sell that product.
The reality is that the global markets are oversupplied, with prices a little over half where they were back at the peak in 2013/14.
AgriHQ's Susan Kilsby says: "Until global milk supply slows the market will remain very volatile."
She points out that the fact prices are now rising will in itself make it easier for Fonterra to shift more product.
After all, markets run on confidence. So if sentiment improves, people are more likely to buy.
The New Zealand dollar has made some small gains this morning.
It was trading at 65.88 US cents at 8am. The kiwi has risen half a percent to 89.73 Australian cents.
The NZ dollar had made gains in the run up to the auction, with traders predicting there would be a lift in dairy prices. However they didn't quite pick the size of the increase.
The NZ dollar is trading slightly lower against the pound at 42.06 pence. It was 81.93 yen and 59.73 euro.
There are fresh doubts about the Chinese economy and renewed concern about the Chinese government's ability to do anything about it.
The Shanghai Composite Index fell 6.1 percent yesterday. The Shenzhen Composite lost 6.6 percent. Shanghai Composite index lost 6.1 percent, while the Shenzhen Composite shed 6.6 percent.
It was their biggest falls since July 27. Last month, the Chinese markets lost around 35 percent.
But it looked like stock prices were stabilising after the Chinese government pumped around US$144 billion into the markets.
The latest sell off occurred after the Shanghai Composite rose through the 4000 mark (18 percent above its low point last month). That prompted some profit-taking. The profit-taking soon turned into a wave of panic selling. Many are concerned that China's stock prices are still overvalued.
In Europe, the German DAX and the French CAC indexes were down around a quarter of a percent. London's FTSE slipped 0.37 percent.
Wall Street ended three days of gains. The Dow Jones Industrial Average slipped 0.19 percent, to 17511 points.
Retailer Wal-Mart fell 3.37 percent after missing analysts' expectations and cutting its 12 month guidance.
Another retailer Home Depot produced a better than expected result and its stock ended 2.59 percent higher.
Brent crude oil fell a third of one percent to a six year low, of $48.59 a barrel. But West texas Crude managed a rise, up 1.8 percent to US$42.46.
Have you ever thought your boss is an arrogant narcissist? Of that they have been promoted far beyond their ability?
Argentinian Tomas Chamorro-Premuzic says that companies have a tendency to promote the wrong people to the top jobs.
He is an authority on psychological profiling, and says: "We have fostered a narcissistic culture where we mistake confidence with competence, which is why arrogant and psychopathic employees are often promoted to managerial levels."
He says it is also the reason there aren't enough women in charge.
In a survey carried out in 62 countries, the words "charismatic" and "inspirational" were the most recurrent attributes linked to leadership.
But he says "there's actually little evidence that charisma helps leaders be more effective. On the contrary, charisma often has the reverse effect, because it helps leaders deceive their followers by masking their incompetence."