Butter
EU prices stopped falling
Europe
Stable with firming undercurrent
In the week just before Christmas there was quite some demand for butter and those parties that needed product urgently had to pay prices of around EUR 7300 ex works. This left the sell side with comfortable positions in the last week of the calendar year. Now that the new year has begun the price has held its ground, and because of some production having taken place after Christmas the supply situation has improved a little, but the buyside is still holding the short end of stick.
Americas
Are we in for a counter-seasonal start of the year?
In the second week of January the US butter market has come back to business at prices that are just a little bit higher than the levels we quoted for early December. At the current quote of USD 2.57/lb (5665/t) ex works US butter is still by far the cheapest on offer on the world market and exports continue to occur. Despite lower milk production in the US the cream supply is good because of the higher fat content that farmers are able to achieve. Butter production in November increased but domestic disappearance was so strong that inventory levels shrunk by almost 20% in one month. Going forward the pressure is beginning to build, despite the fact that the seasonal ramping up of milk production is about to start. The market expects increased competition for milkfats as there are several new cheese plants that are going to come online in the next months. This explains the significant carry we currently see on the futures market, with Nov 2025 prices at USD 2.86/lb (6305/t). In summary the US butter market is stable at the moment but the outlook is slightly positive in what seems to be a counter-seasonal start of the year.
Asia-Pacific
Export demand for AMF remains strong
The market for milk fats felt unstable and AMF futures fell in the last weeks of 2024. At the early January GDT session the butter price generated a plus though, and despite higher volumes on offer the AMF price declined only a little. Southern American buying was strong, because of limited local availability, and this region absorbed almost 40% (1200t) of the total volume on offer. These volumes will clearly not be re-exported to the US this year, whereas this often has been the case in the past. The Middle East has also been displaying buying interest for AMF. The current market price is around USD 6600 FOB for butter and USD 7200 FOB for AMF. Going forward volumes on offer at GDT are going to shrink seasonally, which might create new dynamics in the fat market.
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