Dairy markets have rebounded on the back of strong demand from China and other Asian markets.
The re-opening of the food service sector across the globe is driving the recovery, with the requirement to refill supply pipelines to the Far East being credited for the upsurge in demand.
The easing of the lockdown in the EU has instilled further confidence in the sector, with restaurants and cafes open again for business for the first time since early March.
Butter prices have jumped €200/t on the Dutch spot market, while the trade values for skim milk powder (SMP) and whole milk powder (WMP) improved to €2,000/t and €2,600/t respectively.
The positive market sentiment was also reflected in the stronger GDT which was up 1pc, with brisk demand for SMP pushing prices up 6.7pc to €2,320/t.
The global supply outlook is further underpinning the recovery in prices, with milk output forecast to contract in the second half of the year as a result of lower farm-gate returns.
Although milk supplies have increased in the US and Australia, output in New Zealand this season has fallen, while France and Germany have only enjoyed modest growth.
Despite the positive soundings, milk processor sources cautioned that it was still unclear what level of damage had been inflicted on dairy markets by Covid-19.
Depressed oil prices and fears of a recession in the wider world economy will continue to hit dairy markets, they claimed.
Teagasc economists have warned of a severe income shock for the dairy sector should milk prices fail to bounce back to 2019 levels, claiming that dairy farmer incomes could fall by more than €15,000 if milk prices drop by 10pc relative to last year. A 20pc drop to 27.2c/L (VAT exclusive) will result in a halving of family farm incomes to €39,500.
The ICMSA's Gerald Quain said dairy markets have started moving in a positive direction and with processors such as Arla and Friesland Campina paying about 32c/l for May milk, Irish dairy farmers expect that their own processors will acknowledge the improvement.
Meanwhile, Tom Phelan of IFA urged co-ops to press pause on any further milk price cuts.
"The 3c/l combined March and April price cut decided by co-ops is a major blow to farmers' cash-flow especially, taking €6,500 off the value of a 500,000-litre producer's March to June supplies," he said.
"Co-ops can now wait as dairy markets recover for returns to meet their current prices. Farmers cannot take any further cuts."