Despite some recent positive signs in global dairy markets, a correction on the supply side is still considered necessary, according to the latest report from the EU’s milk market observatory (MMO).

The report notes that global demand for dairy remains healthy, with the exception of some oil-exporting economies, and EU dairy exports for April were strong.

China was the main market for EU exports in April, both in volume and value terms, which is an encouraging sign. The MMO also notes that while dairy product prices have improved generally since May, they are still lower than the start of the year and further increases are expected.

As such, the MMO says it anticipates a decline in the coming weeks in the volumes of product being offered for intervention as the market recovers further. Both domestic and global demand for butter remains strong and butter quotes from the Dutch dairy board increased a further 3% this week to €3,110/t.

Spot prices continue an upward trend, with most-recent Italian and Dutch spot prices up to 27.3c and 27.5c/litre.

This week, the large Dutch processor FrieslandCampina’s guaranteed price for raw milk for July 2016 is €25/100kg of milk. This means the guaranteed price for July remains the same as in May and June. In a statement, it said the demand for dairy products remains stable and now that the EU is past peak milk production, a number of quotations show a slight upward trend.