Butter
Milk fat prices fall in all regions
Europe
Autumn begins with strong supply
The EU market turned back again to the bearish mood that characterizes the other regions as well. With the EU summer heatwaves now well behind us there is no doubt about the availability of cream and butter. The buyside is well stocked and can afford to wait whilst the sell side has quite some nearby volumes that are still looking for a home. Milk production continues to be a little higher than processors anticipated and the mild weather has given Irish milk production quite a strong end of the season. The current market price for EU butter is EUR 3600 ex works and for Q1 it is EUR 3700. With the US prices being significantly lower there can only be further downward potential.
Americas
Increasing imports are tilting the local US market balance
The butter market feels weak at the moment. Spot prices dropped to USD 1.31/lb (2890/t) ex works as market data indicate that market fundamentals are deteriorating. Production is as strong as it has been for many months on the back of ongoing forceful milk production and local disappearance is still OK as well. However, it seems to be the trade balance that is changing. Exports are not really weak but imports have strengthened and as a result the US is now a net importer once again after being a net exporter for the past 18 months or so. Favorable relative pricing and a better tariff situation allow EU origins in particular to find their way to the higher end of the US butter market again.
Asia-Pacific
Prices decline further
The milk fat side of the market continues to be weak and the APAC market is no exception. Demand for Oceania butter into China continues to be quite good despite the NZ premium over other origins. China was again the main participant on the early October GDT for butter and AMF. Chinese buying is in all likelihood not strong enough to sustain the prices and the end of the price decline is probably not yet in sight. Post GDT the prices are USD 4750-4800 FOB for butter and USD 5800-5850 FOB for AMF.
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