With milk production remaining in growth, the uncertainties surrounding out-of-home demand recovery continues to drive weaker market sentiment.
Prices on both SMP and butter futures contracts declined on average in August, lowering the future milk value equivalent in comparison to the previous month. SMP prices saw a larger drop on average in August than butter, despite some recovery in prices in the latter half of the month.
Meanwhile the current market value of milk has moved up marginally. This resulted from higher butter prices as SMP prices dropped month on month. A short term shortage of fats in some key regions of the EU put pressure on cream markets, helping to support prices for butter.