Dairy prices recorded their biggest increase in almost a year at the Global Dairy Trade auction on Tuesday evening.
The GDT price index leapt 4.2 per cent to $US3057 a tonne, the fourth consecutive increase after several months of decline.
But the rally was not enough to recover losses in the second half of 2018, with the index now close to its August 2018 level.
Skim milk powder prices led the charge, up 10.3pc to $US2405/t.
Lactose also rose sharply, up 7.9pc to $US1032/tonne, while the key whole milk powder index was up 3pc to $US2777/t and cheddar was up 4.3pc to $3504/t.
Fats also lifted with butter up 4.6pc to $US4262/t and anhydrous milk fat up 3.2pc to $US5294/t.
Rennet casein was the only commodity to buck the trend, down 1.4pc to US$5047/t.
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Despite the rally, the Australian Government Milk Price Index is forecasting a decline in commodity prices in 2019.
Its Commodity Milk Price Index (CMPI) rose by 1pc between September and October 2018 (the last month for which data on Australian exports was available).
But it said preliminary estimates based on movements in the GDT Price Index suggest the CMPI declined 4pc from October to December 2018.
"The CMPI is forecast to be 3pc lower in December 2019 compared to December 2018," the Milk Price Index website reported.
"Deloitte Access Economics forecasts a modest decline in prices in 2019 for rural exports.
"This leads to the 12-month forecast for the CMPI to decrease modestly."
The Food and Agricultural Organisation's global Dairy Price Index also declined in December.
It averaged 170 points for the month, down 5.9 points (3.3pc) from November, marking the seventh successive month of decrease.
In December, international price quotations for butter, cheese and WMP declined, underpinned by increased availability of export supplies, especially from New Zealand.
However, SMP prices increased marginally on stronger world import demand.
For the whole of 2018, the index averaged 192.9 points, down 4.6pc from 2017, as a result of declines in price quotations for all dairy products included in the index during the second half of the year.