Wellington, Sept 2 NZPA - Dairy commodity prices jumped nearly 17 percent overnight at Fonterra's online auction, with the average selling price for all contracts, across all product lines, rising to $US3562 a tonne.

The rise of 16.9 percent turned around declines over the past four months of 8.3 percent in August, 13.7 percent in July, 3.5 percent in June and 0.8 percent in May,

Prices paid for the core product, whole milkpowder, rose 18.8 percent this morning to $US3522/tonne.

Fonterra directors last month reviewed their forecast payout for 10,500 New Zealand farmers, but left it at $6.90 - $7.10 a kilogram of milksolids, saying there were signs prices would improve later in the year.

In May, Fonterra forecast a higher payout for next season because of stronger demand in Asia and limited global supply.

Fonterra's global dairy trade manager, Paul Grave, said today the result appeared to indicate a firmer tone had returned to the market.

The frequency of the internet auctions is scheduled to double to fortnightly with the next one on September 16 (NZ time).

"Having two events a month will provide a lot more visibility when it comes to assessing the market direction," Mr Grave said.