Record butter prices are continuing to bolster milk returns globally and market analysts predict that demand for dairy fats will remain strong to the end of the year.
Spot prices for butter are now north of €6,300/t, while the current heat wave in Europe is driving icecream sales while also hitting milk output.
The continuing surge in demand for dairy fats is good news for Irish farmers, with processors coming under pressure from the farm organisations to further raise milk prices.
Glanbia and Lakeland Dairies increased their respective milk prices for July by 1c/l to a base of 34c/l including VAT, while Kerry moved from 33c/l to 34.5c/l.
Kevin Bellamy of Rabobank predicted the “elevated butter prices” would underpin dairy returns for the remainder of the year.
Meanwhile, Ornua’s Joe Collins said the milk supply situation and demand for dairy fats had been exacerbated by the recent heat wave in southern and eastern Europe.
However, Mr Collins cautioned that there were “clouds appearing on the horizon” due to the increased butter prices and that “some kickback” on sales had already occurred.
Nielsen buying data up to the end of June shows butter sales in Germany slumped almost 10pc.