Analysis Butter
New record butter price is up for grabs
After a dip, butter prices are on the rise again. A new price record seems to be only a matter of time. The price-supporting factors outweigh the concerns about falling demand. There is talk about it, but no concrete indications of it.
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Butter stocks are usually built up at this time of year and then delivered in the third and fourth quarters. Butter consumption is generally higher in the autumn and winter months. At the moment, stockpiling is not an option, according to producers. This is also reflected in the production figures reported by RVO. This shows that production fell by almost 8% in the first quarter to 35.200 tons.
Lots of milk in the cheese box
The decline is due to two things. First of all, milk production in Northwestern Europe (the Netherlands, Germany and France) lags behind other years and has now passed its seasonal peak. In addition, towards the summer months, the fat and protein contents in the milk decrease further. In addition, a relatively large amount of milk has been flowing into the cheese vat for some time now, because this results in an even better valorization of the milk.
Where stocks are tight, sales opportunities are described as good. Both towards the retail and the bakery industry. Although there is a lot of resistance to the high prices, buyers can't really make a fist. The DCA Butter quotation is now trading above €7.200 per tonne, with an upward trend. Butter prices are also rising in the United States and New Zealand.
€7.500 per ton is already mentioned
Butter prices are currently showing peaks of up to €7.500 per tonne. This is above the existing records for the quotations of DCA and ZuivelNl. If the market as a whole moves towards this level, existing records will soon be broken. It looks like that at the moment. All the more so because cream prices are also rising, partly due to good demand from the fresh segment.
It is expected that the fireworks will erupt on the dairy market at the end of the third quarter, when milk production is heading towards the trough of milk supply. Only then will the scarcity really come to light. Around the summer holidays, the market will probably cool down temporarily, but not sink. Only a large-scale drop in demand can disrupt the 'party', but there are no signs of that. All the more so because the substitutes for butter are also expensive. In addition, European product (expressed in dollars) is more expensive than American product, but not heavily overpriced.