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The September 2022 milk price futures contract last traded at $9.07, after strengthening over the past few weeks.
The futures price compares with Fonterra’s current season forecast of $7.90-$8.90 per kg, with an $8.40/kg midpoint.
An $8.40 milk price would equal the highest paid in Fonterra’s history - in the 2013-14 season.
Westpac senior agrieconomist Nathan Penny said there was already ‘‘upside risk’’ to his $8.50/kg milk price forecast.
At the last auction early this month, the GDT index rose 4.3% and whole milk powder prices gained 2.7% to $US3921 ($NZ5558) a tonne.
Futures market trading is also pointing to further increases in whole milk prices, the February contract trading at $US4200 a tonne.
Beyond that, all the contract periods out to October 2022 point to prices of more than $US4000 a tonne.
Head of derivatives at Jarden Mike McIntyre said high milk price futures were being supported by improved whole milk powder prices.
‘‘Typically, what you would say is that Chinese demand supports whole milk prices,’’ he said.
‘‘But in recent GDTs there have been a range of different buyers and I would suggest that the reason for that is there is a problem in just getting product at this time of year.’’
He noted New Zealand milk collections had been down, and production had been falling in several other major dairy-producing nations.
‘‘A lot of that has to do with environmental constraints, which I think has been a theme that has resonated throughout the world.
‘‘We are seeing that in New Zealand and we are seeing it in the likes of France and Germany, after initially seeing it in the likes of the Netherlands.’’
A rebound in interest from China - which fell below 40% last auction compared with over 50% typically - would be strongly supportive of prices at today’s GDT auction, he said.
He expected to see a normalisation in cheddar prices after 14.1% spike at the last auction, and good support for whole milk powder, skim milk powder, anhydrous milk fat and butter, Mr McIntyre said.
‘‘The reason for that is we are in our flush at the moment, the rest of the world’s production is low and we are not providing as much milk right now as the rest of the world thought we were going to.’’
All dairy farmers should be making money at $9.00/kg, Mr Mr McIntyre said, but he noted farmers’ costs had escalated too.