The price of milk levelled off sharply at Fonterra's latest online dairy auction following a 13.5 per cent surge at the previous event, suggesting prices might be finding a base.

The GDT-TWI Price Index fell 0.5 per cent versus the last sale, and is about on par with the 10-year norm. The average winning price at the event was US$3024 (NZ$3789) per metric tonne.

The prices Fonterra gets at the online auctions determine the payout it passes on to farmers.

"The result suggests dairy markets are finding a base, but further improvements and or lower New Zealand dollar is still required to deliver Fonterra's $5.50 (per kilogram of milk solids) price," ANZ New Zealand said .

"Current spot pricing would indicate a milk price around $5.25 per (kilogram of milk solids)."

The Fonterra payout is a closely watched metric as a lead into the rural economy, a sector that has remained largely subdued since the global financial crisis.

High levels of leverage have seen farmers opt to pay down their debts in the last few years, and a higher payout price is seen as a requirement for them to start spending in the broader rural sector.

Whole milk powder was the clear outperformer at the latest auction, with prices up 2.7 per cent with robust demand across all delivery periods, largely due to tighter supply levels.

The other product categories were more mixed, with weaker demand for short-term delivery dates, which picked up towards the November and December contracts.

The sales saw 175 participants out of a 667 qualified bidders take part, with 118 winning bids.

- © Fairfax NZ News