Big contrast between butter market in EU and US

On the Chicago Mercantile Exchange, spot butter recently rose to a record level of $3,34 per pound. The American butter market is not completely unfamiliar with a revival in the autumn, but this time it was excessively large and also not expected. US analysts say this is due to an imbalance between supply and demand. Milk production decreases seasonally. In addition, domestic demand for butter in late summer was higher than expected, while buyers were already on the market to secure volumes for the winter season when more baking takes place.

The revival is all the more striking because butter prices this entire year were considerably below the level of previous years. Based on this, analysts believe that the downward trend will soon resume. This is already the case in the meantime. The revival therefore appears to be a convulsion during the seasonal transition from summer to winter.

High cream price in Europe
In Europe the butter market is much less exciting, but it is certainly not boring. Butter prices rose to around €4.700 per tonne in October. Last summer was characterized by high inventories, but these can now be reduced. Demand is picking up towards the winter season. Less butter is produced. On the one hand, this is due to the lower milk supply, which is lowest around this time of year. In addition, cream prices have risen sharply in recent weeks. Cream is now almost €2.000 per tonne more expensive than butter. This makes the liquid raw material much too expensive to make butter profitably. Butter producers therefore sometimes say that they have set up production lines and only produce to meet their contract obligations.  

In the meantime, consumer packaging is offered on store shelves for less than €2 per 250 grams. These are relatively low prices, meaning that price can no longer be an obstacle for consumers to consume less. This means that a drop in demand no longer appears to be an issue in the coming winter season.