In Fonterra's latest online auction, where the average price increased and the winning price also hiked at US$3701 a tonne, the results bolstered the optimism of NZ economists.

BNZ economist Doug Steel said he saw signs of global dairy price stability in the latest auction, and it is a solid result in an uncertain world.

Dairy products make up an estimated 25 per cent of all merchandise exports.

The average price for a basket of products in the latest auction increased 1.5 per cent having fallen by 0.7 per cent and 1.6 per cent respectively in the previous two events, the New Zealand Herald reported.

The quantity of product sold in the auction totalled 31,026 tonnes.

"I guess we're still a bit wary of [the] potential downside of the European debt crisis, [that it] does in fact dent global growth by more than currently anticipated but as the auction goes past you're getting a bit more confidence in the resilience of the world dairy market," Mr Steel said, noting that the instability in Europe has been going on for a while, but the dairy market remains relatively unperturbed.

"I think it's a very solid result as the auctions have been for quite a few months now, not only in [price] level but in the fact that they haven't been that volatile in what has been a fairly uncertain period," Mr Steel summed up.

The forecasts for milk market performance in terms of production and sales in 2012 have included an increase of 5 per cent from previous year.

Farmer co-operative Fonterra last month raised its forecast payout for the 2011/12 season by 20c to $6.90-$7, saying the payout forecast reflected a modest recovery in global dairy commodity prices over the previous two months and comprised a milk price of $6.50 per kg of milksolids and a distributional profit range of 40c-50c per share, the Herald reported.