Dairy product prices rose in the latest GlobalDairyTrade auction, led by a larger-than-expected jump in the price of whole milk powder.

The GDT average winning price jumped 9.4 percent to to US$3,042, up from US$2,758 two weeks ago. Some 28,000 tonnes of product was sold, down from 31,326 tonnes of product two weeks ago.

Whole milk powder soared 19.2 percent to US$2,874 a tonne, while rennet casein climbed 7.7 percent to US$8,776 a tonne. Skim milk powder increased 6.7 percent to US$2,598 a tonne, and butter gained 6.1 percent to US$3,783 a tonne.

The AgriHQ Seasonal Farmgate Milk Price for the 2014-15 season has increased by 15 cents per kilogram milksolids to $4.55/kgMS following the GDT auction, which compares with Fonterra's current forecast for $4.70/kgMS.

"The strong increase in prices achieved at the February 3 GDT auction as well as the expectation that milk powder prices will continue to rise over the remainder of the season are the prime drivers of the improvement in the AgriHQ Seasonal Milk Price forecast for the 2014-15 season," AgriHQ dairy analyst Susan Kilsby said in a note.

Last week Fonterra said it would be reducing the volume of product sold on GDT across the remainder of this season, which spurred a jump in whole milk powder prices on the NZX Dairy Futures market. WMP futures contracts gained 14 percent on average in the past fortnight with most of this movement occurring after Fonterra's decision, Kilsby said.

"Fonterra's recent announcement regarding the tightening of supply triggered a change of market sentiment," Kilsby said. "This brought about an expectation that prices would rise further which renewed buyer interest despite most markets currently holding sufficient supplies to cover immediate demand."

Even so, this week Synlait Milk cut its forecast milk payout to $4.40/kgMS, undershooting Fonterra's cut to $4.70/kgMS, citing depressed global dairy prices.

"The sheer volume of milk available around the globe will curtail the amount that prices can continue to increase in the next six months," Kilsby said. "WMP prices have greater potential to increase further as New Zealand is the world's largest supplier of this product, whereas the majority of the globally traded skim milk powder is sourced from the Northern Hemisphere."

Meanwhile, cheddar dropped 11.1 percent to US$2,636 a tonne, while anhydrous milk fat fell 5.4 percent to US$4,067 a tonne.

Butter milk powder slipped 0.4 percent to US$2,436.

Lactose was not offered at the latest event.

Sweet whey powder was not offered, not sold, or sold at its starting price in either the current event and/or in the prior two events.

The New Zealand dollar last traded at 73.09 US cents at about 12:44pm in New York, compared with 73.05 US cents at 5pm in Wellington on Tuesday.

There were 111 winning bidders out of 169 participating bidders at the 16-round auction. The number of qualified bidders rose to 688, up from 677 at the last auction.