Can the high butter price last?

The DCA butter quotation has increased by 60% since the summer to just under €6.000 per tonne. ZuivelNl's quotation has been briefly above that limit for weeks and is also at the highest level since 2017. Like other dairy products, butter is benefiting from the shortage that arose in the second half of last year as a result of the sharply lower milk supply in Northwest Europe.

This affects European butter production, which shrank by 1,8% to 1,75 million between January and October, prompted by a significant contraction in Germany and Poland. Production in the Netherlands increased by 5,4% to 116.000 tonnes in the same period. This means that Dutch butter production is picking up again after shrinking figures in 2020 and 2019.

Tightness on the American market 
The butter market in the United States is also experiencing shortages. This is fueled by the leveling off of milk supply in recent months. Butter stocks are responding to this. The US Department of Agriculture (USDA) monitor shows that butter stocks have fallen below last year's levels since August.

In November, stocks fell below 10.000 tons. In addition to the leveling off milk supply, butter production is slowed down by cheese, which also provides good valorisation. Butter producers also seem to have difficulty obtaining cream due to a shortage of truck drivers.

Domestic demand for butter is described as good, while exports are showing growth figures. In November, exports increased by no less than 125% to more than 30.000 tons. This figure does give a distorted picture, because the US imports more butter than the volumes that are exported. Including from the European Union. Just like in Europe, American butter prices have now risen sharply to $4.700 per tonne.

European butter the most expensive 
On the world market, European butter - converted into dollars - is currently the most expensive, followed by product from New Zealand. American butter is considerably cheaper. The difference between European and American product is almost $2.000 per tonne. From this point of view, there is no room for further price increases in Europe.

There are doubts in the market whether current butter prices can be maintained. The milk supply increases again seasonally, which also increases butter production. Butter can be regarded as a seasonal product. Consumption weakens as spring approaches and picks up again from autumn.