Milk prices increased through August due to high demand from processors looking to secure volumes ahead of expected future price rises. On 18 July, the EU announced a new €500m (£420m) aid package for the dairy sector, including incentives to further reduce milk volumes, which could lead to further falls in milk supply.
Reduced milk volumes are hitting supplies of milk powder, pushing SMP prices higher. In addition, the European Commission extended the SMP PSA until February 2017.
Butter prices are up 40.5% year on year due to falling production and rising demand, with buyers aiming to secure volumes at the current price. In June 2016, UK butter production was down 9% year on year.
Rising egg production in the UK tempered prices in August, with shell egg prices falling 3.9% month on month. In Q2 2016, UK egg packers reported a 5% year on year increase in output to 7.2 million cases.