Record global bulk butter prices are helping to underpin farmgate milk prices, Dairy Australia (DA) says.
DA senior industry analyst John Droppert said butter prices had risen because of consumer and food service market trends in favour of butter and full cream milk consumption.
Mr Droppert said the seven per cent drop in Australia’s milk production last season has also contributed to the squeeze, reducing the supply of butter.
He said the good returns from butter were helping support farmgate milk prices against a severe ongoing trough in skim milk powder prices, even though the pooled return from milk fat and protein products were not at similar record highs.
The big rise in butter prices was also making a welcome contribution to the overall return from a skim milk powder/butter mix that was helping support cheese prices, Mr Droppert said.
He said rise in global butter prices had occurred over the past nine months with the increase flowing in recent months from food service/manufacturing buyers to retail butter prices.
The rise in global butter prices did not continue at the October 3 Global Dairy Trade (GDT) auction, with prices for butter down 3.6 per cent cent and falling 10.3 per cent for butter milk powder.
Dairy commodity prices dropped overall by 2.4 per cent at the October 3 auction, reversing the 0.9 per cent increase at GDT’s September 19 auction. The auctions include skim milk powder, whole milk powder, cheddar and lactose.