In contrast to most other major dairy markets, New Zealand pasture growth is reported to be very good leading up to the new dairy season.
But weather and growing-condition challenges faced by other major dairy producers is starting to worry buyers and the latest globaldairytrade auction results reflect that concern.
The US drought is providing a further setback in destroying pasture, while in Europe, a mixture of weather extremes "is pushing milk production lower at a higher-than-normal rate", Rabobank said.
Weather forecasters say there are clear signs El Nino is developing. This poses a threat of drier condition in eastern Australia, areas of significant dairy production.
Auction prices rose strongly, at about their fastest pace in US$ over the past two years, climbing 7.8% from the previous auction two weeks ago, and rising almost 12% from a month ago.
The up-trend was led by milk protein, which soared 15.4% in value to an average of US$5,351 per tonne, although prices rose in all seven products traded.
The rise for whole milk powder lagged other products, rising 7.0% from the previous auction two weeks ago. Skim milk powder was up 7.3%.
The recovery in anhydrous milk fat prices has been spectacular since its recent low point in mid-May 2012 - the product has gained 27% in the past three months.
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