International dairy prices climbed at the latest Fonterra online auction as US dairy and grain producers struggle with the country's worst drought in more than 50 years.
Fonterra's Global Dairy Trade Index rose 7.8% overnight on Wednesday to an average selling price of $US3054 per tonne.
Prices for all products rose, with anhydrous milk fat increasing 14% and milk protein concentrate up more than 15% compared to the previous fortnightly sale.
BNZ economist Doug Steel says the drought is putting a lot of pressure on the feed costs for the US dairy producers.
He says the US Department of Agriculture is forecasting little or no growth in milk supply this year and if demand continues to rise prices are likely to go up as well.
Prices have risen at two consecutive sales.
