Milk powder prices pulled out of their decline in New Zealand's futures market, while butter values extended their recovery in Chicago, amid ideas that Europe has gained another yard in a battle over global pricing.
Whole milk powder futures for October, the spot contract, rose 1.1% to $3,105 a tonne on Wednesday – their first winning session in two weeks.
In Chicago, butter futures overnight edged 0.2% higher to 251.00 cents a pound, extending to 3.6% their recovery from a low two weeks ago.
The gains followed results of Tuesday's GlobalDairyTrade auction of physical product which surprised many observers in seeing further gains for values of dairy fat contracts, while seeing further losses in values of protein-rich and low fat products, such as rennet casein and skim milk powder.
Butter prices rose 1.2% to set a fresh record high at the auction of $6,026 a tonne.
And whole milk powder prices at GlobalDairyTrade (GDT) rebuilt their premium over skim milk powder to $1,202 a tonne, the third highest figure on records going back past five years.
The average whole milk powder premium over that time has been a little over $350 a tonne.
The gains in GDT suggested that, for now, the global market is going the way of Europe, where strength in dairy prices has seen values open up historically-high premiums over values in Oceanian and North America, other major exporting regions.
Ahead of the auction, Tobin Gorey, said that "the question of who blinks on pricing, higher-priced Europe or lower-priced New Zealand remains open".
After the auction, Mr Gorey flagged that the rise in butter prices, and a 5.3% jump to $6,764 a tonne in GlobalDairyTrade values of anhydrous milk fat, "affirms the tight supply of milk fat".
And highlighting in the whole milk powder market that "we are looking for how the divergence between prices in the EU and New Zealand" resolves itself, he highlighted too the rise in GDT values.
Latest European Commission data, for September 10, show EU butter priced at E652 per 100 kilogrammes, equivalent to $7,827 per tonne, with whole milk powder valued at E312 per 100 kilogrammes, equivalent to $3,746 a tonne.
The rise in GDT fat prices also contrasts with a downgrade last week by the US Department of Agriculture to its forecast for domestic prices of dairy products including butter.
EU dairy prices, Sept 3, and premium to Oceania, (US) values
Butter: $7,293, +$1,218, (+$1,636)
Cheddar: $4,200, +$187, (+$634)
Skim milk powder: $2,066, +$166, (+$181)
Whole milk powder: $3,679, +$566, (+$317)
Prices in tonnes. Source: European Commission
US butter prices "have fallen in recent weeks as export growth has failed to materialise", the USDA said in a briefing this week, although prices are still seeing rising well above last year's 2.078 per pound, boosted by firm demand in the country as elsewhere.
According to the USDA, "tight world supplies and high demand for products with high butterfat content have driven the rapid rise in butter prices.
"Demand for butterfat products has risen globally due to consumer perceptions that butterfat is healthier than trans-fat," as found in some processed vegetable oils.
"Several studies have indicated possible health benefits of butterfat or lower risk of consuming butterfat than previously assumed."
By Mike Verdin