Butter

EU prices continue to break records

Europe

The EU butter price appreciated swiftly in the final week of August and then dropped a little in the first week of September. At the current – Market Watch record, see Box below – level of EUR 7900 ex works there is actual some stability, though nobody knows how long this will remain the case. Because of the high price physical trades are somewhat limited right now. Butter availability is tight and it will be interesting to see how long the buyside can afford to wait before having to replenish pipelines. Consumer demand so far seems quite resilient and it is beginning to look like budget prices for next year will have to be near the EUR 7000 level in order to have some control over butter procurement costs. With the milk supply fundamentals unchanged there is not much relief to be expected for the tight supply and low stock situation. This fuels the fear that the butter market will be looking at high prices for quite a few weeks.

Americas

Tight supply both domestically and in the EU put a floor in the market

The US butter price was pushed up to the USD 3.20/lb (7055/t) ex works level – highest level of the year – as the short supply situation in the EU combines with the approach of the US high demand season. Bulk butter inventories are shrinking steadily as micro-fixing is now happening across the board, since cream prices are simply too high to make fresh butter. The tightness in the EU puts a hard floor in the US market price level as it almost becomes interesting to export US butter to the EU. Many domestic buyers are securing butter purchases for 2025 already, as they prefer the stability of the current 2025 prices (around USD 3/lb) over the uncertainties that hand-to-mouth buying will likely bring. Spot butter that changes hands is becoming fresher week over week, which is another signal that stock levels are dropping. Retail demand continues to be good and with Q4 seasonal consumption coming up soon the market is not expected to weaken.

Asia-Pacific

Sufficient demand to pick up increasing volumes on the supply side

Despite the large volume on offer on GDT the butter price in the APAC region has held its ground. Demand for Oceania butter was sufficiently strong, not only from the usual suspects nearby but also from importers in South America and the EU. At the current level of USD 6600 FOB post GDT the butter buyside is leaning back, as most players continue their hand-to-mouth procurement strategy. AMF is on offer at USD 7600 FOB, which means that the spread with butter is quite normal.

NICE TO KNOW: The EU Butter price reached a record high in the Market Watch history. Only four months ago we presented the same graph of the monthly price and the calendar-year average as a proxy of budget prices that purchase managers may be dealing with. Setting a fair budget price has proven to be increasingly challenging, and with the current peak level this observation is once again confirmed.