Dairy prices have hit their highest level in 11 months in the global auction overnight.
The average price at the auction rose 1.3 percent to $US3317 a tonne. It follows a 4.3 percent rise at the last auction two weeks ago.
The price of whole milk powder increased 0.5 percent to $US3210 a tonne. Prices for other products sold were higher across the board, with strong rises for cheese and butter.
ASB chief economist Nick Tuffley said the result reflected the fact that global demand was still holding up well, providing support for dairy prices.
It was heartening to see the strong gains at last fortnight's auction being held onto, he said.
"We're seeing in particular Chinese demand has been strong as their economy recovers from the pandemic."
Fonterra this month has narrowed and lifted the bottom end of its forecast farmgate milk price range to between $6.70 and $7.30 per kilogram of milk solids.
Federated Farmer's dairy chair and Fonterra farmer shareholder Wayne Langford hoped shareholders would be able to relax over the festive season, knowing that at the moment the outlook was positive.
"Of course there's still a long way to go [in the dairy season] and you don't spend your milk cheque until you've got it in the bank but ... certainly at the moment it's looking good."