Milk powder on a spoon© Rex

World dairy prices have risen for the fourth fortnight running, giving farmers and milk buyers a much-needed shot of optimism.

The average price on the Global Dairy Trade (GDT) auction surged 9.4% this week to US$3,042/t (£1,998/t), meaning returns have jumped 20% since mid-December.

Milk powder performed particularly well, with whole milk powder prices up 19.2% to US$2,874/t (£1,887/t) and skim milk powder rising 6.7% to US$2,598/t (£1,706/t).

Butter values were up 6.1%, but cheddar and buttermilk powder recorded falls.

And average prices are still down a third on the all-time high a year ago.

Supplies were 11% lower than the previous auction, with 28,000t sold.

The key market driver has been New Zealand milk giant Fonterra slashing its production for the 2014-15 season, expecting output to be down 3.3% on the year.

The co-op has blamed dry weather in the country’s biggest dairy regions.

Fonterra has said it would reduce the amount of product offered through the GDT auction and direct sales.