Butter
And down we go again
Europe
Butter sellers struggle
The undertone in the EU market remains bearish, but higher cream demand for the festive season gave the prices a little lift at the end of October. However, with milk supply remaining relatively good and butter stocks near historical records the buyside did not blink an eye when prices appreciated. And so, gradually, sellers are beginning to offer lower prices again, at around EUR 3650 for nearby and EUR 3750 for Q1, ex works. Going forward the entire global milk fat market feels a little weak now that butter is becoming more and more a by-product for milk processors as the protein side of the business is so strong.
Americas
When will low prices cure low prices?
Despite high cream multiples US butter producers continue to run their churns, as the prices for BMP are so good that they compensate for the cream. This is a new development, as normally at this time of year fresh butter production winds down and repacked bulk butter takes its place. As these re-packers have contracted sales the US butter market is very loose and storage levels are climbing further. According to September reports US butter exports have risen again after a slower period in the summer months. US exports are very competitive versus the EU and New Zealand, where prices are also decreasing further. Going forward there may be further downward potential, but at some point the price will find a bottom, but at what level is still everybody’s guess.
Asia-Pacific
NZ origin still relatively expensive
Butter prices all over the world continue to slide. With US prices being significantly lower than APAC prices the market feels hectic. Buyers understand what is happening and know how to react. The current butter prices are generally well within procurement budgets and buyers are securing transactions in all four of the coming quarters. Spot prices for butter are about USD 4450-4550 and for AMF they are at USD 5350-5450, both ex works. With all three main production regions in the same boat there is probably further downward potential.
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