On Fonterra's online global auction, the dairy commodity prices surged 17% overnight after facing a fall for four consecutive months; the projected payout for 2011-2012 could be the reason.

Cameron Bagrie, National Chief Economist at ANZ, said, “The renewed buyer interest that Fonterra directors saw when reviewing the 2011-2012 payout forecast recently after four months of auction price falls is starting to come through”.

Bagries expected total payout to reach to $6.50-$7.00 this season.

The prices for the whole milk powder increased 18.8% to US$3552 a tonne on an average, as compared to the previous month’s auction. There was 15.8% advancement in the average price for skimmed milk powder, bringing it to US$3197 per tonne.

In the overnight auction, around 151 bidders traded for the commodities for US$100 million in two hours.

In order to check the persistent volatility in the market, Fonterra, which is world's principal dairy exporter, has increased the number of auctions to two per month.

Paul Grave, Fonterra's Manager of Global Dairy Trade, expressed that the increase in the prices of dairy products signalled that market is getting firm. He added that there had been expectations that the consumption of dairy products would enhance in Russia and the US.

As per the Fonterra’s projections, this season the milk payment component of total payout will be $6.60/kg milksolids.