Butter
Price relaxation occurs in all export regions
Europe
The market weakens
After a significant downward price correction in July butter prices stabilized, be it because of absence of key personnel due to the holiday season. Product is changing hands around a level of EUR 7000 at the moment. Availability is good and the buyside is better covered than last year around this time. Therefore the market feels somewhat weak, also because of stable milk supply throughout the summer weeks and because of strong import of butter and AMF from the US and New Zealand. Sellers are as yet hesitant to open up for longer term deals.
Americas
Strengthening milk supply boosts cream availability
US cream availability continues to improve, causing spot butter prices to drop to USD 2.44/lb (5380/t) ex works. Against a backdrop of strengthening milk production growth and high content levels this all seems very straightforward. However, the US milk fat market is also developing some odd characteristics that make the picture a bit more complicated than it appears, June bulk butter inventory levels for instance turned out 5.9% lower than last year around this time. This probably prevented a stronger drop in prices since last month. At the same time, production was some 10% higher than last year in June. What seems to be happening is that manufacturers that normally buy bulk butter for Q4 sales prefer to buy cream this time. As a result domestic demand for bulk butter is the weak spot in the overall US milk fat market where retail demand as well as export demand still thrive.
Asia-Pacific
Butter price found some room to relax
In Oceania the butter price has been significantly above the AMF price for quite a few months already, which is not in line with the content levels of these products. However, the situation is beginning to normalize with supply of AMF tightening more than supply of butter. At the early August GDT session China was very active on the nearby delivery date, as the growing bakery industry in China continues to substitute palm oil by milk fats because of the superior taste. Post GDT the market price for butter is USD 7300 and for AMF it is USD 7400, both FOB.
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