After five months of price increases, Fonterra’s online whole milk powder auction system saw a drop early this morning.

The average price for whole milk powder (WMP) on the internet-based sales platform globalDairyTrade dropped an average of 7% at the end of today’s trading event.

The average price achieved across all contract and contract periods for WMP was $US3309 per tonne - $US251 lower than the December event.

Prices ranged from $US3230 per tonne to $US3555 per tonne.

Fonterra continues to reiterate its message that milkpowder prices are volatile despite another increase in spot prices set by its online auction system globalDairyTrade last night.

The dairy giant’s December trading event concluded this morning with prices 3.6% up on average on last month.

The average price across all contracts and contract periods for whole milk power was $US3560 per tonne – up $US123 per tonne.

Whole milkpowder prices have risen by 95% since July.

Whole milk powder prices surged further on the back of Fonterra’s latest online auction early this morning.

Prices averaged $US3022 a tonne, up 5.7% against last month’s trading event.

This flies in the face of global analyst predictions last month that forecast a drop in the average price which has climbed about 65% since July.

However, continuing upwards movement of the New Zealand dollar against the US will dull the shine of these gains.

During last night’s trade event, prices ranged from $US2825 per tonne to $US3095 per tonne.

Analysts are predicting a drop in Fonterra’s next online whole milk powder auction – possibly eroding the 24% gain achieved this month.

ASB economist Chris Tennent-Brown reiterated comments made this week by Western Illiniois University Professor William Bailey, chair of the school’s agriculture department, that the 56% increase in auction prices since July are unsustainable.

Prof Bailey said the reason for the price jumps on globalDairyTrade’s last two auction events is not clear.

NBR’s prediction that whole milk powder prices would climb this week at Fonterra’s online auction was realised this morning, with a lift of 25.8%.

Fonterra dairy farmers are “cautiously optimistic” following the results of the latest globalDairyTrade online auction this morning.