Sugar may be out of fashion among health-conscious Western consumers, with demand worries one reason cited for the tumble in sugar prices this year.
But it looks like fat may be back in vogue – in the dairy sector, at least.
The rise in dairy fat values evident in this year's surge in butter prices has, for the first time, driven their premium over oilseed-based alternatives above those that milk proteins command, according to industry group Dairy Australia.
And this is down to more than the European dynamics that many observers have highlighted.
An apparently weak spring milk production "flush" in the EU has been viewed as curtailing butter output, while the European Commission sits on large stocks, of some 350,000 tonnes, of protein-heavy skim milk powder amassed through intervention buying.
It seems as though dairy fat is in strong demand too.
"Historically, fat and protein premiums have moved together, with protein commanding a significantly greater premium than fat," Dairy Australia said, pegging protein's advantage over oilseed-based alternatives at Aus$12 per kilogramme as recently as late 2013 - twice the advantage that dairy fats enjoyed.
"However, the range between fat and protein premiums has narrowed considerably over the last three years," the group said.
"And since December 2016 the co-movement between the two has completely broken down," with fat commanding the higher premium over alternatives based on the likes of soybeans.
"While extraordinary factors such as the large EU skim milk powder stockpile have also contributed to these outcomes, these developments point to the trend of growing demand for fat."
In fact, "high butter prices, which have outperformed those of other dairy commodity groups over the last six months appear to be due to strong and growing demand for butter", Dairy Australia said.
And this could have implications for the whole dairy industry, for milk farmers as well as processors.
The trend "may have wider structural implications around how processors select product mixes and processing streams, and potentially drive greater weighting of fat content in farmgate milk pricing".
The comments came as Dairy Australia, in its first estimate for the Australia's milk output in 2017-18, forecast volumes rebounding 2-3%, after falling to an expected 8.95bn litres this season, which ends this month.
"With farmgate prices in export regions looking likely to show modest improvement in 2017-18, a favourable outlook for most key inputs, and weak comparables," a recovery in output evident in the last few months "is expected to continue in the new season," the group said.
The comments follow the announcement by Murray Goulburn, Australia's largest dairy processor, on Tuesday of a forecast milk price of Aus$5.20-5.40 per kilogramme of milk solids to its farmers for 2017-18.
While above the Aus$4.95 per kilogramme of milk solids expected for this season, the figure has been questioned by many of the group's producers, still smarting over a deep cut in prices unveiled in April last year which left many farmers running in the red, and for fuelling this season's estimated 7.5% drop in national milk output.
Earlier this month, rival Fonterra forecast a price for next season of Aus$5.30-$5.70 per kilogramme of milk solids, with a potential Aus$0.40 incentive on top.
The number of dairy farms in Australia fell by 4.8% in the year to April, to 5,810, an acceleration on the average annual pace of decline of 4.1%, Dairy Australia said.
Shares in Murray Goulburn, which also announced a strategic review "which will look at all aspects of… strategy and corporate structure", on Wednesday closed at Aus$0.665 in Sydney, an all-time closing low, and down 23% in the two sessions since the shake-up and milk price was announced.
By Mike Verdin