Butter prices may push higher still if the weather does not start to improve, says ASB rural economist Nathan Penny.
At today's GlobalDairyTrade auction, butter prices continued their record-breaking run while whole milk powder put on a modest gain, suggesting Fonterra's forecast of $6.75 per kg of milksolids for this season is safe for now.
Whole milk powder prices, which have the biggest bearing on Fonterra's milk price, gained 0.6 per cent to US$3122 a tonne - where they have largely been tracking since Fonterra increased its farmgate milk price forecast in July.
For the eighth time this year, butter prices hit a record, reaching US$6026 a tonne - up 1.2 per cent compared with the previous auction.
The wetter-than-normal spring may be hitting production, Penny said, pointing to industry data out this week that showed August milk production fell by 1.5 per cent on a milksolids basis.