Butter
US exports are affecting local inventories
Americas
Butter exports reach unprecedented levels
The US butter price has moved up 9% versus our early May quote. This is mainly the result of much lower than expected inventory according to the most recent Cold Storage report. Apparently, butter exports during April have been much stronger than the market had thought as the reported inventory levels declined rather than grew, which would normally have happened during flush season. In combination with healthy food retail demand and average bulk demand the price for 80% fat salted butter rose to USD 2.55/lb (5620/t) ex works. This is all the more remarkable as this happened at a time when availability is strong because of the flush season. US exportable butter commands at least a USD 10 ct premium, but even at a level of USD 2.66/lb (5865/t) FOB it is clear that US butter is very competitive versus EU butter. After the about USD 300 freight cost the discount vs EU butter is still at least USD 2000/t. This also means that we should not rule out any further upward price potential for US butter going forward.
Asia-Pacific
Demand remains strong
Continued strong demand from the bakery industry in the APAC region is keeping the butter price elevated. On the GDT SEA was the main buyer. The ratio between butter and AMF declined a little, as it is now 106%, but the goal is about 85% (butter price divided by AMF price). As the Asian bakery sector is expected to grow further, there is little doubt that demand will remain strong. This may imply that butter production will become the main valorization target in the next season. The current price for butter is USD 7800, and for AMF it is USD 7350, both FOB.
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