High butter price falls, but not slipping yet

As quickly as butter prices shot up this spring, the market has remained stable through the summer. Between April and the end of August, the quote hovered around the €7.000 per tonne level, which is historically solid. Meanwhile, there is another six for DCA's butter quotation.

The dairy market is under considerable pressure across the board in mid-October. The (record) high prices are falling to lower levels. The main reason for this is the fear of one that has marked down many commodity prices. After all, high inflation in the Eurozone means there is a risk of a drop in demand, all the more so because dairy is one of the drivers of food inflation. The price corrections in the dairy market do not come out of the blue, however. Insiders had been taking this into account for months, because instinctively the prices had gone too far.

No price-driving factors
Further price increases are looming in the coming months, also for butter. Market sentiment in dairy is currently weak and there are no factors predicting a turnaround anytime soon. In fact, from November the milk supply will increase seasonally again. This will lead to higher production volumes. For early next year, business is currently being conducted at levels of around €6.500 per tonne. This is significantly lower than current market prices. The substitutes for butter in the form of palm and olive oil have also been marked down in recent weeks.

At the same time, there are also no signs that the butter market is going to slide down any time soon. Butter stocks in Europe are still described as tight to normal. On a global scale, there is a shortage due to large deficits in the United States. There, the butter price recently set a new record, briefly below the level of $7.000 per tonne. The American butter shortage is partly due to the fact that dairy manufacturers are struggling with staff shortages.