Butter
Global demand is unable to absorb global supply
Europe
Who will consume all this butter?
The mismatch continues in the EU butter market with spot supply far greater than spot demand. Spot prices have come down to EUR 3700-3800 ex works, and although there is sufficient carry in the forward prices warehousing capacity is beginning to become a limiting factor. With the premium per quarter amounting to about EUR 200 the Q4 2027 prices are above EUR 5000. Nevertheless there is buying interest for these dates as there are sufficient buyers that vividly remember having to pay around EUR 7500 for EU butter. We repeat our remark that it is the demand for 2027 that keeps the EU butter market afloat at the moment, since the export markets of yet do not offer much relief as the US prices have come down as well.
Americas
Has the US butter price reached the bottom yet?
US butter production continues to be strong as milk supply is plentiful. Cold storage of butter remains below average but the market finds this of no concern, illustrated by the fact that the butter price in the US dipped at USD 1.55/lb briefly in the final days of April. In the first week of May the prices recovered to levels in the low USD 1.60s/lb (3530-3600/t) ex works. The domestic demand side is comfortable but is willing to accept sharply priced offers. In export destinations such as the Middle East and Northern Africa US butter faces some competition with EU origin. As both regions need exports to balance their markets the price levels in US and EU will likely remain connected. The main bullish factor in the US butter market is the fact that cream supply has tightened seasonally, particularly versus 2025 levels when cream was extremely abundant. In a situation where cream supply would tighten a lot further, the low butter cold storage levels may all of a sudden become an issue and evoke an upward price trend for US butter. Though this risk is evident there is no indication that this may happen soon.
Asia-Pacific
Quiet buyside leads to price erosion
Both on and outside of GDT the market for milkfats is quiet. Prices trended down by some 10% since early April, with the AMF price holding its ground a little better than that for butter. Nevertheless, the Oceania milkfat prices continue to command a significant premium over US and EU product. This makes it likely that further downward pressure will emerge. The current Q2 price for butter of Oceania origin is about USD 6000 and AMF changes hands at USD 6700, both CIF Asia.
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