Fonterra could lift its forecast payout to farmers after a surge in global dairy prices overnight on Tuesday night, but an economist warns the rise won't fully offset the effects of the drought.
The co-operative's latest bimonthly auction shows the average winning price rose 15% to $US4683 a metric tonne.
But volumes put up for auction stood at 16,000 tonnes - a fifth less than at the last auction two weeks ago, and only half that of the one before that.
BNZ economist Doug Steel says the price surge may prompt Fonterra to lift its forecast milk payout to farmers this and the next season.
