Global dairy prices inched up overnight in the latest Global Dairy Trade event.
The average price for commodities rose 1.3 percent over the past two weeks to US$3317 per metric tonne (MT).
The increase followed an overall price rise of 4.3 percent in the previous auction two weeks ago.
Whole milk powder - the most important product for New Zealand farmers - rose 0.5 percent to US$3210/MT, while butter prices were up 6 percent to US$4221/MT.
Cheddar was up 4.2 percent to US$3893/MT, anhydrous milk fat rose 1.9 percent to US$4360/MT, lactose was up 1.5 percent to US$1024/MT and skim milk powder inched up 1.2 percent to US$2930/MT.
A total of 31,701 metric tonnes was sold at the auction.
In ASB's weekly commodities report, economist Nathanial Keall said prices for whole milk powder had now edged ahead of where they were a year ago, when they were at US$3200/MT.
"Recent auctions have been marked by strong demand from China amid the recovery there, and the continued focus on food security. Pleasingly, the contract curve remains flat and stable, so price gains aren't being driven by short-term supply fears, but by steady demand thanks to rising consumption," Keall wrote.
Earlier this month the strong demand from China led Fonterra to lift its forecast milk price from $6.30 - $7.30 per kilogram of milk solids (kgMS) to $6.70 - $7.30 per kgMS.
Keall said the "big factor to watch now" was how summer weather would affect milk production.
"The strength of the NZD recently isn't likely to be much of a factor from here given Fonterra's hedging policies, but is likely to be more of a factor next season," he said.
