Dairy prices improved again in the overnight global dairy trade auction on Tuesday night, with the trade-weighted average lifting by nearly 2%.
The overall increase was led by a sharp rise in whole milk powder prices, which rose by an average of more than 9%.
Buttermilk powder and milk protein concentrate prices rose by more than 4% and there was a small improvement in skim milk powder prices.
However, there was a big drop in cheddar cheese prices - nearly 10% on average.
Anhydrous milk fat prices also fell, by more than 3%.
BNZ economist Doug Steel says the drought in the United States is putting pressure on supply.