Fonterra's reference products performed strongly at the auction, with skim milk powder prices jumping 10.3 per cent, whole milk powder gaining 3 per cent and anhydrous
milk fat firming by 3.2 per cent.
Hurrell said hot weather in Europe was helping to drive up skim milk powder prices.
"We are starting to see the effects of that hot summer in Europe really play out now, with milk volumes slowing down, which has an impact," he said.
"We are seeing really good demand out of China, which is going to support it," he said.
"Europe was holding down a bit of skim milk powder stock, and most of that is exhausted now, so you are starting to see that play out through the shortage of supply," he said.
Rural lending specialist Rabobank said it was a strong auction, given China had already imported a significant volume of both whole milk powder and skim milk powder over the last two months of 2018.
"Continued good weather across much of the country has seen feed reserves aplenty and milk production volumes still strong," Rabobank said.
"While November 2018 milk collections saw modest year-on-year growth of 1 per cent, we anticipate stronger December 2018 growth given that the tail end of 2017 was hot and milk supply dipped," it said.
Last December, Fonterra downgraded its farm gate milk price forecast to a range of $6.00 to $6.30 per kg of milksolids, down from a previous forecast of $6.25-$6.50, citing global supply issues.
Fonterra's forecast earnings per share range is 25 to 35 cents per share for the current financial year.
